In an interview with CNN former Central Bank (BC) director Tony Volpon stated that there is currently no fiscal concern in the American political debate, whether in electoral terms or in technical discussions between banks and institutions.
According to Volpon, the United States must use the power of the US dollar to finance existing deficits.
He highlights that the nominal deficit under Joe Biden’s government, considering the unemployment level, is a record, matching that observed during the great crisis of 2008.
Impact of the US elections
The expert points out that if the Republican candidate for President of the United States, Donald Trump, wins the elections, there could be a more powerful inflationary impact due to the increase in import tariffs.
Furthermore, Trump’s proposed deregulation and tax cut agenda is likely to be welcomed by the American private sector.
Volpon points out that Trump plans to cut the corporate income tax rate from 21% to 15%, while Democratic candidate Kamala Harris proposes raising it to 28%.
This difference in tax proposals can significantly influence the market and economic growth.
Possible economic scenarios
If Trump wins, Volpon predicts a positive reaction from the American stock market, which could generate a positive shock to the level of growth.
However, this scenario could also result in inflationary pressures, leading to a possible reaction from the Federal Reserve (Fed).
The former Central Bank director mentions that the Fed is about to begin a cycle of interest rate cuts, scheduled for September.
However, with a possible Trump victory, this downward cycle could be smaller than the market currently predicts, which would have a negative impact on emerging countries, including Brazil.
This content was originally published in There is no fiscal concern in the American political debate today, says Tony Volpon on the CNN Brasil website.
Source: CNN Brasil
Bruce Belcher is a seasoned author with over 5 years of experience in world news. He writes for online news websites and provides in-depth analysis on the world stock market. Bruce is known for his insightful perspectives and commitment to keeping the public informed.
