Dalio warns of US stagflation, says rate cuts could hurt Fed credibility

Dalio flags stagflation risks, recommends up to 15% gold allocation

Investor Ray Dalio warned that the US economy has entered a stagflationary phase, noting that cutting interest rates under such conditions would be a mistake for potential Federal Reserve chair successor Kevin Warsh.

The founder of Bridgewater Associates said in an interview with CNBC on Monday, April 27, that persistent inflationary pressures, coupled with slowing growth, are creating an environment that calls for caution from policymakers.

“We are certainly in a stagflationary period. Because of the issues that are here, in terms of a more immediate inflation, farther from the target,” he said, adding that Warsh would risk undermining confidence in the central bank if he proceeds with rate cuts.

Separately, Dalio indicated that the strong rebound in equity markets was justified despite the ongoing war in the Middle East, supported by robust corporate earnings. However, he recommended allocating between 5% and 15% of investment portfolios to gold, describing it as an “effective diversifying” tool.