Nouriel Roubini warns global economy risks ‘hard landing’

Economist Nouriel Roubini warned that the global economy is in risk of a “hard landing” due to central bank efforts to control persistently high inflation in advanced economies.

Central banks will need to raise interest rates higher than originally expected to bring inflation back to targets, Roubini said Tuesday at a business summit held by the Australian Financial Review.

“Inflation will remain high because commodity prices will remain high this year,” Roubini said. Factors such as the escalating Russia-Ukraine war and growing Chinese demand for commodities amid a return to growth will fuel inflation, he added.

Roubini, who earned the nickname “Dr Doom” for his long-term bearish outlook on the global economy, says that inflation in the US, Europe and Australia is more persistent than expected by markets and central banks. The Reserve Bank of Australia is expected to raise interest rates for the 10th consecutive month on Tuesday.

Peter Costello, chairman of Australia’s Futures Fund, said the RBA needed to convince the public it would see through its plan to lower inflation and said the Federal Reserve was talking “harder” than the local government. legislator.

“The worst thing that can happen is when central banks announce that they will continue with a policy of breaking inflation, and they don’t follow through because then we accept rate increases without benefit,” Costello told the AFR summit in Sydney.

RBA Governor Philip Lowe is under pressure for his ability to communicate a consistent policy message, after the pandemic showed that rates are likely to remain at a record low until 2024.

Economists expect the RBA to raise the cash rate by another 25 basis points to 3.6% at Tuesday’s meeting.

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