Ray Dalio said theFederal Reserve will have to cutinterest rates to combatstagflation in a recent interview.- Stagflation refers to a combination of soaring
inflation and sluggishgrowth .
Ray Dalio said he expects central banks around the world to start cutting interest rates by 2024 as stagflation hits the global economy.
The
"We are in a tightening mode that can cause corrections or downward moves to many financial assets," Dalio, the founder and co-CIO of
Stagflation refers to a combination of high inflation and sluggish growth. It can be disastrous for stock markets, as it's associated with high unemployment, lower consumer spending, and reduced profits.
$4 - but $4. Dalio doesn't expect the Fed to tame soaring prices anytime soon.
"It is a structural inflation situation that is going to produce stagflation," he said.
Low growth is also contributing to the concerns about stagflation. The World Bank recently warned a recession will be "$4" and slashed its global growth projection from 4.1% to 2.9%, while the $4.
Dalio told the Financial Review he's avoiding fixed income, but investing in inflation-hedged assets like $4 and commodities.
"There are assets to hold during a tightening and there are assets to hold during an easing," he said.
"In both cases, right now, we don't want to own debt assets," Dalio added. "We favor inflation hedged assets."