Bank Of Central Banks: Stagflation Risk For U.S. Economy
Malcolm Knight, the general manager of the Bank for International Settlements, told Reuters’ Brian Love last week that stagflation might occur in the United States, with weak economic growth lasting well into 2009, if not longer. According to Investopedia, stagflation is “a condition of slow economic growth and relatively high unemployment- a time of stagnation- accompanied by a rise in prices, or inflation.” The BIS is an international organization which fosters international monetary and financial cooperation and serves as a bank for central banks around the world, including the Federal Reserve. Established on May 17, 1930, it is the world’s oldest international financial organization.
Reuters’ European economic correspondent wrote:
“I see a certain amount of scope for stagflation in a number of economies and that usually tends to result in subpar economic growth performance for an extended period of time, which could go well into 2009 or even longer,” said Knight, a Canadian who worked for more than 20 years at the International Monetary Fund.
“I think the U.S. economy is likely to experience weakness this year and in much of 2009,” said Knight, speaking to Reuters at BIS headquarters in Basel, Switzerland.
“Stagflation is a definite risk.”
Love noted that Knight’s outlook contradicts the White House’s assertions that the U.S. economy will rebound later in the year as the result of economic stimulus initiatives.
Source:
“U.S. risks stagflation: BIS chief”
Brian Love
Reuters, April 29, 2008
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