ZCZC
BCN-33
US-TRADE-TARIFF-ECONOMY-INFLATION
U.S. tariffs threaten to disrupt global economy, says Mexican economist
MEXICO CITY, June 21, 2018 (BSS/Xinhua) – U.S. tariffs imposed on several
of its main trade partners could spur inflation at home and disrupt the
growth of emerging economies, Mexican economist Gabriel Casillas said on
Tuesday.
“Geopolitical risks” are nowadays more easily transmitted throughout the
global economy, especially where the United States, the world’s biggest
economy, is concerned, said Casillas, president of the National Economic
Studies Committee at the Mexican Institute of Financial Executives (IMEF).
“There has always been conflict in some part of the world, but the
channels of transmission through the markets and the macroeconomy were never
clear,” Casillas told reporters at a press conference.
Things are different now, said Casillas, noting that “the risks are
related to a very particular topic and connected to the macroeconomy of the
markets: the inflationary pressure in the United States.”
New tariffs on imports will lead to higher prices for some goods, and if
U.S. inflation rises more than expected, it could lead the Federal Reserve to
step up the pace of its interest rate hikes.
Since the 1970s, every time the Fed raised the interest rates, it sparked
a crisis in emerging markets, said Casillas.
Last week, the Fed raised short-term interest rates by a quarter of a
percentage point in the second hike this year and the seventh since the end
of 2015.
The agency foresees making a total of four hikes this year, three in 2019
and one in 2020.
BSS/XINHUA/HR/1215