J.P. Morgan: Oil above $100 could heighten stagflation risks — CNBC Top News

J.P. Morgan urged investors to monitor stagflation risks, even if the economy does not experience a significant slowdown. James Sullivan, managing director and co-head of the bank’s global fundamental research division, said that oil prices remaining above $100 per barrel for an extended period could signal the beginning of such a period, CNBC Top News reports.

Rising prices and moderate growth

According to Sullivan, the combination of acceptable economic growth rates and higher inflation is once again making the discussion of stagflation relevant for the first time since the 1970s. He noted that such a scenario would not necessarily mean a significant slowdown in economic growth.

Sullivan also said that record output volumes in the artificial intelligence industry and record budget deficits among a growing number of governments would affect pricing, especially amid weaker demand.

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Investor demand and inflationary factors

According to the J.P. Morgan representative, an increasing number of investors with a long-term horizon prefer the corporate sector over the government sector. He pointed to a mismatch between demand and supply.

Global economic prospects are also being pressured by the effects of El Niño and the conflict in the Middle East, Sullivan said. He linked one of the first coordinated cycles of monetary policy tightening by central banks in many years to rising food and energy prices.

Sullivan added that core inflation remains relatively persistent, and he does not expect this situation to change quickly.