ECB President Christine Lagarde dismissed stagflation worries in the euro zone, saying today’s conditions don’t match past stagflation patterns. The ECB kept interest rates unchanged and projected only modest growth, even as inflation pressures persist and the balance of risks to both growth and inflation has worsened.
JPMorgan Chase CEO Jamie Dimon said he is not worried about inflation, suggesting current trends won’t derail the economy. However, he flagged a darker scenario: stagflation. That mix of weak growth and stubbornly high prices remains one of the worst risks, according to Dimon’s assessment.
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Global government bonds are set for steep monthly losses as fears tied to the Iran conflict boost worries over stagflation, with investors pricing hotter inflation and weaker growth. Short-dated debt steadied briefly, but oil pushing above $100 is driving bets on higher-for-longer interest rates, reducing the appeal of safe-haven government debt. China’s bonds are comparatively resilient.
Global business surveys due this week are expected to show worsening growth and rising inflation after seven weeks of Middle East conflict, with Europe seen as particularly vulnerable. Analysts warn the mix could trigger stagflation—weak economies with stubborn prices—forcing policymakers to reassess interest rate plans based on the latest data from Australia to the US.
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