Kholodkov drew attention to the fact how the world markets had reacted to oil price changes. All Western stock exchanges (New York, Chicago, and London stock exchanges) reacted 'very nervously' to the fall in oil prices. The S&P 500 index fell 7.6% for the first time in 7 years. Many commodity businesses have a more difficult time generating revenue.
At the same time, gold prices soared untypically high. The current price of gold now is unprecedented: more than $1,700 per troy ounce. US Treasury yields also fell sharply. Investors are trying now to find 'safe havens' to provide themselves with shelter from the storm. Global economy braces for difficult times ahead, RISS expert underscores.
He recalled that the US Fed had cut interest rates by 50 points a few days ago. This usually happens when there is a risk of an economic slowdown. President Trump also talks about stimulating the American economy. Growth of US debt has exceeded even nominal GDP growth multiple times. The stock market is overheated.
In 2015-2016, inflation jumped sharply after oil prices fell significantly. Inflation then averaged 11-12% per year; food inflation accelerated to 15-16%. Unemployment and poverty rates rose drastically. If the US and Western monetary authorities fail to slow down the crisis, the whole world will face hard times, the expert considers.
In 2008-2009, the monetary authorities had more opportunities to contain the crisis; the key rate was not so low, it could be reduced. But now the bank interest rate in the US is 1.5%. In expert's opinion, Washington has very limited opportunities to stimulate the economy.