ISTANBUL, Oct. 25 (Xinhua) -- Inflation in the United States has become so "sticky" that the Federal Reserve's interest rate policy has been insufficient to bring it down, a Turkish economist has said.
"The Fed's rate hikes have reduced inflation to some extent, but inflation fluctuating around 3.5 and 3.8 percent is not anymore a rate it can manage under its current policies," Murat Tufan, an analyst with Turkish broadcaster Ekoturk, told Xinhua in a recent interview.
Tufan said the post-pandemic inflation that has emerged in the United States has characteristics not seen in previous periods. It had become rigid and dependent on many external factors including global energy prices, geopolitical circumstances, and logistical resources.
Tufan also highlighted the negative impact of the ongoing conflict between Israel and Hamas and the risk of it escalating into a much broader front.
"There is such a risk. Therefore, if we see a land operation or another development on Gaza, oil prices will rise above 100 dollars per barrel," he said.
Under such international circumstances, the Fed's 2-percent inflation target is an "overly optimistic level," and it will either set the target to 3 percent or raise interest rates further contrary to market expectations, he said.
In his view, since the Fed has reserve money, it can make Americans feel the impact of high inflation less. However, if the interest rate hikes could reach up to 6 percent, this move could seriously shake global markets and hamper the growth of the global economy.
"In such a case, we will be discussing hyperinflation and stagflation processes worldwide," Tufan said.
"The deepening of the stock market sales will probably cause the welfare level of developing countries like Türkiye or most of the countries in the OECD (Organization for Economic Cooperation and Development) to fall and cause them to struggle against much greater inflation." ■