CNBC: U.S. Inflation Could Hit 3% or 4% by the Middle of 2022, Veteran Strategist Warns

Article by Holly Ellyatt in CNBC financial

More and more strategists believe investors are underestimating the outlook for consumer prices.

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

“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.”

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

Roche’s comments come amid heightened discussion over the direction inflation will take. Rising inflation is one of the biggest concerns facing the market right now, as high prices could affect asset values and corporate margins and limit consumer buying power.

Roche said the Fed would be “behind the curve,” however. “It’s going to mistake what it calls transitory inflation and try and kind of gloss it over while effectively what it does is create a much longer-term inflationary problem,” he said.

In any case, a rise in inflation is seen as inevitable with .....

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