ANL 14.75 Increased By ▲ 0.18 (1.24%)
ASC 14.00 Increased By ▲ 0.45 (3.32%)
ASL 15.10 Increased By ▲ 0.50 (3.42%)
BOP 8.60 Increased By ▲ 0.18 (2.14%)
BYCO 6.69 Increased By ▲ 0.19 (2.92%)
FCCL 18.80 Increased By ▲ 0.70 (3.87%)
FFBL 26.50 Increased By ▲ 0.20 (0.76%)
FFL 11.19 Increased By ▲ 0.04 (0.36%)
FNEL 10.89 Decreased By ▼ -0.01 (-0.09%)
GGGL 15.70 Increased By ▲ 0.45 (2.95%)
GGL 32.11 Increased By ▲ 0.31 (0.97%)
HUMNL 6.35 Increased By ▲ 0.14 (2.25%)
JSCL 17.26 Decreased By ▼ -0.03 (-0.17%)
KAPCO 33.25 Increased By ▲ 1.85 (5.89%)
KEL 3.23 Increased By ▲ 0.02 (0.62%)
MDTL 2.27 Increased By ▲ 0.07 (3.18%)
MLCF 36.45 Increased By ▲ 2.34 (6.86%)
NETSOL 102.16 Increased By ▲ 3.66 (3.72%)
PACE 4.40 Increased By ▲ 0.14 (3.29%)
PAEL 23.55 Increased By ▲ 0.40 (1.73%)
PIBTL 7.70 Increased By ▲ 0.10 (1.32%)
POWER 6.76 Increased By ▲ 0.11 (1.65%)
PRL 13.93 Increased By ▲ 0.23 (1.68%)
PTC 9.07 Increased By ▲ 0.20 (2.25%)
SILK 1.35 No Change ▼ 0.00 (0%)
SNGP 41.80 Increased By ▲ 1.09 (2.68%)
TELE 16.93 Increased By ▲ 0.50 (3.04%)
TRG 90.51 Increased By ▲ 3.66 (4.21%)
UNITY 25.30 Increased By ▲ 0.10 (0.4%)
WTL 2.15 Increased By ▲ 0.01 (0.47%)
BR100 4,665 Increased By ▲ 4.73 (0.1%)
BR30 18,674 Decreased By ▼ -129.79 (-0.69%)
KSE100 45,072 Decreased By ▼ -257.67 (-0.57%)
KSE30 17,430 Decreased By ▼ -120.87 (-0.69%)

Coronavirus
LOW Source: covid.gov.pk
Pakistan Deaths
28,728
1024hr
Pakistan Cases
1,284,840
47524hr
1.12% positivity
Sindh
475,616
Punjab
443,094
Balochistan
33,479
Islamabad
107,689
KPK
179,995

WASHINGTON: Fears that inflation could spiral out of control due to a massive US stimulus package are overblown, IMF chief economist Gita Gopinath said Friday.

Her argument contradicted critics of US President Joe Biden's proposed $1.9 trillion rescue package for the world's largest economy, who say the amount is excessive, and even those Democratic economists who have also raised concerns about price spikes.

Gopinath estimated that with the full amount of stimulus, inflation "would reach around 2.25 percent in 2022, which is nothing to be concerned about," she said in a blog post.

Some economists, including former Treasury secretary Larry Summers, have urged caution saying excess spending could spark an inflationary spiral that the Federal Reserve would find difficult to control.

Rising prices would erode purchasing power and higher interest rates to control inflation would send the cost of borrowing soaring in an economy already awash in debt amid the coronavirus pandemic.

Gopinath noted the "concerns about an overheated economy that could push inflation well above the comfort zone of central bankers." But she said "the evidence from the last four decades makes it unlikely." In the decade following the global financial crisis, US annual inflation barely cracked the Federal Reserve's 2 percent target, and in December the rate was just 1.3 percent.

And Gopinath said the proposed government aid will push US GDP up five to six percent over three years, which would recoup the 3.5 percent contraction in 2020.

The IMF has consistently supported a large US stimulus plan to recover from the Covid-19-induced recession that has left millions jobless.

US Treasury Secretary Janet Yellen late Thursday repeated the administration view that "the price of doing too little is much higher than the price of doing something big." Yellen noted that inflation has been very low for over a decade, and while it remains a risk "it's a risk the Fed and others have tools to address."

Yellen, like US central bank chief Jerome Powell, who succeeded her in the post, stressed that true unemployment in the US is close to 10 percent - above the government's official rate of 6.3 percent last month - and about nine million people remain unemployed, which she says justifies the size of the government aid.

But growing signs that the economy is coming back to life as businesses reopen amid an accelerating vaccination campaign have caused markets to begin to fret about impending price hikes.

The yield on 10-year Treasury notes, a benchmark for inflation expectations, has been rising sharply since October, and accelerated since the start of the year to around 1.3 percent, the highest since before the pandemic.

Those fears got a boost from a spike in the producer price index (PPI), which showed wholesale inflation surged 1.3 percent in January, the largest since the index was revamped in December 2009.

But Powell last week brushed off inflation concerns, saying after prices collapsed last year, some sharp increases are expected but would be unlikely to last.

We love hearing your feedback, please help us improve by answering these few survey questions

Comments

Comments are closed.