According to Citigroup CEO Jane Fraser, a lack of a debt ceiling increase in Congress before the December deadline would result in a “brutal winter” for the markets.
Although she expressed hope that the imbalance in supply and demand would be corrected next year, she conceded that it may be longer-lasting than anticipated.
“We’re probably going to have a bit of a brutal winter, especially in the energy markets”. “But these are not long-term structural things that we won’t be able to adapt to.”
As Fraser noted, central bankers and other business leaders have acknowledged that high prices will persist for quite some time.
Supply chain bottlenecks, according to Federal Reserve, European Central Bank, Bank of England, and Bank of Japan leaders, may lead to higher inflation for an extended period. Nonetheless, they warned that prices would likely fall once supply disruptions from the Covid-19 pandemic will resolve.
Secretary of Commerce Gina Raimondo spoke at the Milken Institute’s global conference last week. She warned that the global chip shortage at the heart of the supply chain bottleneck would take time to resolve.
The U.S. and Canada both reported high inflation last month, the highest in more than a decade. In September, consumer prices in the United States rose by 5.4 percent, a 13-year high; while Canadian prices rose by 4.4 percent, an 18-year high.
Among the potential headwinds ahead for the market, Fraser noted that Congress must raise the U.S. debt ceiling by the end of December.
The Senate raised the debt ceiling by $480 billion earlier this month. Treasury Secretary Janet Yellen said she would allow the United States to pay its bills through December 3.
“We cannot wait until the last minute to solve this problem,” Fraser stressed at the White House.