A Trump Win Could Bring Back US Inflation, Allianz’s Subran Says

(Bloomberg) -- US inflation could return with a vengeance if Donald Trump wins the presidential election, stopping monetary easing in its tracks, according to Allianz Chief Economist Ludovic Subran.

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Speaking on Bloomberg Television, he said that doubts in financial markets over the path of the Federal Reserve’s policy reflect suspense over the “flip of a coin” outcome awaited in the November ballot.

“Were Trump to be elected, there is a risk of inflation picking up again very strongly in 2025 in the US,” Subran said. “He’s very inflationary — and so I think that would cause the Fed to stop” loosening.

The Allianz economist said he had long ruled out the prospect of an initial 50 basis-point rate cut next week, given the political backdrop of the Nov. 5 election. The odds of an outsized Fed move on Sept. 18 have receded after US data on Wednesday showed underlying inflation there unexpectedly picked up in August.

That leaves a likely trajectory totaling 75 basis points for the rest of this year before the next president then takes office, Subran said, observing that 2025 is shrouded in uncertainty.

“It is really a question mark, because Trump could actually bring back tariff inflation, labor inflation,” he said. “Also the devaluation of the dollar is a big issue, when you think how much more inflation it could bring to the US. So that’s what markets don’t know much about — because nobody knows who is going to win this election.”

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