Nouriel Roubini, described as the "crisis prophet", warned central banks.
Stating that the ECB and BOE face a bigger dilemma than the US Federal Reserve (Fed), Nouriel Roubini said that prices are still rising fast and growth is slowing in Europe. Arguing that the recent increase in oil prices will keep headline inflation high, Roubini argued that it is premature to talk about looser monetary policy.
In his speech on Bloomberg TV, Roubini argued that the BOE should raise rates to 5.75 percent.
"10 PERCENT DROP IN US STOCKS POSSIBLE"
According to the report in Bloomberg HT, Roubini recommended short selling US stocks for the rest of the year, suggesting that investors are too optimistic about credit and bond markets. Roubini warned that given the state of the global economy, a 10 percent drop in US stocks is possible, adding that other stock markets will be even worse.
"INTEREST RATES SHOULD BE KEPT HIGH"
"The Eurozone and UK central banks are in a difficult situation because inflation is too high and the economies are faltering, but they need to keep raising rates to beat inflation," Roubini said: "This is a dilemma for both the ECB and the BOE. On the one hand, the shrinking economic activity will perhaps lead them to stop at this point. On the other hand, if inflation continues to hover well above the target, they may need to hike much more."
"RATE CUTS COULD START IN MID-2024"
Roubini argued that the US economy is in a stronger position, but that it is wrong for markets to expect a rate cut early next year, adding that the Fed may need to raise interest rates further and that the first cuts will take place "perhaps towards the middle of 2024".
'Crisis oracle' Roubini warns central banks
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