The Podcast Link
The Notes.
How are you keeping your spending under control?
Inflations vs spending
Inflation
Debt
HSBC group chief Michael Geoghegan has warned that inflation is one of the biggest issues facing the world economies.
Speaking at an Asia Society lunch in Hong Kong, he said many countries and central banks were "not facing up to inflation".
"I do believe that to a very large degree the inflation numbers that are coming out of various central banks don't reflect the underlying rate of growth in ... household expenditure," Mr Geoghegan said. He noted that, while it was easy to say inflation was slowing, "it doesn't achieve anything".
"Inflation is there and it's growing," he said.
Mr Geoghegan said inflation would benefit the US economy but in the short term the US would need to increase interest rates. "I'm not sure governments in the current time wish to face up to that (interest rates increases), but I would urge them to," he said.
Mr Geoghegan predicted that interest rates in the US could rise after the presidential election in November. "Clearly, I think in this election year it's unlikely that we will see interest rates going up, but they may well need to go up after the administrator has been appointed," he said.
In his wide-ranging speech, he also touched on the investment banks, which he said had a flawed model.
"The idea that groups of people who don't have deposits to call on and who raise large amounts of money and take the position as banks ... I think that's probably a subject we will see change over time," Mr Geoghegan said.
