Dalio says rate cuts should not happen, warns U.S. economy is in stagflation

[Financial News]  
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Billionaire investor Ray Dalio warned on the 27th local time that the United States is now in stagflation and that Kevin Warsh, the nominee for chairman of the Federal Reserve System (Fed), should not cut interest rates.
In an interview with CNBC, Dalio, founder of hedge fund Bridgewater Associates, said the U.S. economy is slowing while facing persistent inflationary pressure.
According to the Federal Reserve Bank of Atlanta's GDPNow, the estimate for U.S. first-quarter GDP growth, which had initially been projected at 3.0%, has now fallen to 1.2.
Analysts say the 2026 Iran War is deepening K-shaped polarization, which is weighing on consumption that accounts for more than two-thirds of U.S. GDP.
Dalio said, "We are definitely experiencing stagflation," adding, "From the standpoint of immediate inflation, these current problems are pushing inflation further away from the Fed's target."
Dalio warned that if Warsh takes office as Fed chairman in mid-May and cuts rates, confidence in the central bank's independence could be damaged at a critical moment.
He told Warsh, "You should not cut rates now," and added, "You will lose credibility, and the Fed will lose credibility as well."
Dalio emphasized, "If you look at monetary policy in other countries, you will see that they are not cutting," and added, "So whatever the current benchmark rate is, it should not be lowered... at least based on the information we have now." Meanwhile, the Fed will hold a Federal Open Market Committee (FOMC) meeting on the 28th and 29th. It is expected to be the last meeting chaired by Jerome Hayden Powell.
The market expects rates to be left unchanged with near certainty.
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dympna@fnnews.com Song Kyung-jae Reporter