The president of the St Louis Federal Reserve says the American economy is heading into a very volatile period which could have long reaching implications. Speaking to Reuters on Monday, James Bullard said that prior to the pandemic, economic growth was slow and inflation and interest rates were low but that is no longer the case.
He explained, “This environment is a very different one where you have upset the global equilibrium…The reverberations will continue, and you will have a lot more volatility than you are used to. We will have long, lingering effects as the rest of the world recovers. You have shortages and bottlenecks everywhere. You have industries still adjusting to the post-pandemic world – many things happening, and at a pace we are not used to.”
This analysis is of clear interest to gold, with the precious metal typically going from strength to strength in periods of uncertainty. We have also seen it thriving in the current high interest environment, which Bullard expects will continue.