Impact of 2i: High interest rate and inflation

2i: inflation and interest rates

Professor Steve Hanke & Professor Daniel Lacalle

Ayna.AI recently hosted the Q1 A-CLG (Ayna.AI Critical Leaders Group) on "2i: inflation and interest rates - impact on our wallet." Distinguished economists, Professor Steve Hanke and Professor Daniel Lacalle, shared their perspectives on the current state and outlook for the economy considering the recent developments in inflation and interest rates.

In his talk, Professor Steve Hanke focuses on the US Economy and explains that monetary policy involves more than just interest rates, and includes the growth rate of money supply, domestic money supply changes causing inflation, and the Federal Reserve's poor inflation prediction. He notes that changes in the money supply take time to affect asset prices, real GDP, and inflation, and predicts near-future changes in these factors due to an 18% annual increase in the US money supply from 2020-2022.

Professor Daniel Lacalle discusses how inflation & interest rates will affect the global economy. He shares his views on how the current tightening cycle may cause a $10tn loss in market value and firms would be wise to hold onto cash. He also discusses that the private sector demand will reduce while government deficits will likely increase, and central banks' anti-inflation efforts won’t lead to credit growth or higher investments.