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U.S. inflation could hit 3% or 4% by the middle of 2022, veteran strategist warns

Added 04-21-21 06:01:04am EST - “There is a growing body of strategists who believe investors are underestimating the inflation outlook.” - Cnbc.com

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Posted By TheNewsCommenter: From Cnbc.com: “U.S. inflation could hit 3% or 4% by the middle of 2022, veteran strategist warns”. Below is an excerpt from the article.

Speculation over the direction inflation will take continues to dog markets, but there is a growing body of strategists that believe investors are underestimating the outlook for consumer prices.

David Roche, president of investment firm Independent Strategy, is among them. He told CNBC Wednesday that he believed the U.S. inflation rate, which stood at 2.6% in March from a year ago, could rise much further.

"My own view is that we will see inflation of probably 3 or 4% by the middle of next year and that is completely inconsistent with, say, U.S. 10-year bond yields being at 1.6%. That yield could easily double and when it does, then you come to the crunch point that markets are going to experience," he told CNBC's "Squawk Box Europe."

"The reason prices will rise, and really there are a couple of things, is that you're going to end up with, on the other side of Covid (the pandemic), huge demand as consumers spend the excess savings which they have accumulated," he said.

"And you're going to end up with big government forever ... and that of course is less efficient and less efficiency means higher inflation."

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