The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world’s biggest economy hits further troubles, Kenneth Rogoff, former chief economist of the International Monetary Fund (IMF), said last week.
“The U.S. is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say ‘the worst is to come’,” said Rogoff, who was speaking at a financial conference in Singapore.
Rogoff’s comments came as investors dumped shares last week of the largest U.S. home funding companies Fannie Mae and Freddie Mac after reports that U.S. government officials may takeover the housing finance titans.
In addition, Rogoff—who was the IMF’s chief economist from 2001 to 2004 and is now an economics professor at Harvard University—also criticized interest rates cuts by the U.S. Federal Reserve, which has reduced interest rates 3.25 percentage points to 2% since September 2007.
“Cutting interest rates is going to lead to a lot of inflation in the next few years in the United States,” he said. —Reuters