Ray Dalio warns of stagflation as US inflation climbs to 3.3%
Billionaire hedge fund manager Ray Dalio has a habit of saying provocative things on television.
Earlier this month, for instance, he said that the globe was sliding towards a world war, with full-blown conflict between major powers growing more likely.
Today, Dalio took to CNBC to say that the US economy has slipped into a 'stagflationary environment.'
According to the founder of Bridgewater Associates - the world's biggest hedge fund - warned that stubborn inflation and slowing growth should terrify everyone.
Dalio shared his outlook just a few days before the government publishes its preliminary look at US economic growth for the first quarter of 2026 - economists estimate that the economy expanded by 2.2 percent in the quarter.
That's a long way from stagflation, which is what economists like to call the poisonous combination of rising prices and falling economic growth.
Building on his take, Dalio said it would be a mistake for the presumptive new Federal Reserve chair Kevin Warsh to lower interest rates.
'We are certainly in a stagflationary period,' Dalio told CNBC earlier this morning.
Dalio is somewhat correct in at least half of his hot economic take: The US is currently facing rising prices.
The March inflation report out earlier this month showed the prices rose 3.3 percent in the year to March, up sharply from the 2.4% reading in February.
Skyrocketing energy prices were the main driver, accounting for nearly three-quarters of the overall gain in inflation in March.
As for the growth half of the forecast, the expert consensus is that the US economy is very much still growing despite the war and higher energy prices.
Dalio warned that if Warsh were to lead the nation's central bank to cut interest rates, that would risk damaging confidence in the Fed.
'Certainly, you would not cut interest rates now,' Dalio said. 'The Fed would lose its credibility, particularly now.'
Heading into his confirmation hearings, there were worries that Warsh would buckle under pressure from President Donald Trump to cut interest rates.
But when he worked as a Fed governor more than ten years ago, Warsh was considered to be a 'hawk' - very concerned about the Fed's impact on inflation and prices - who argued against lowering rates.
Wall Street universally expects the Fed to leave rates unchanged at this week's meeting and for the rest of the year.
This is not the first time in recent memory that Dalio has expressed deep concern about the American economy.
After President Trump kicked off months of economic chaos over international trade tariffs, sending the stock market into an extended frenzy, Dalio took to NBC's Meet the Press.
'I think that right now we are at a decision-making point and very close to a recession,' he said.
'I'm worried about something worse than a recession if this isn't handled well.'
This morning Dalio explained that the dramatic move higher in the stock market made sense despite the ongoing Iran war because of the strength of corporate earnings.
