BofA: Carbon tax could add to inflation

Francisco Blanch, Bank of America head of global commodities and derivatives research, told CNBC in a discussion on how much the energy sector is playing into the inflation story, why prices are elevated and how prices will look this holiday season.

Blanch pointed out that surging energy prices in oil and natural gas are cementing higher inflation and could consequently force central banks to hike interest rates sooner than expected to offset them.

“We already have an industrial recession looming… and politicians in Washington will look at that and wonder ‘is this what we want here?”, Blanch added.

On Tuesday, Senator Joe Manchin said the carbon tax is not considered at the moment for inclusion in Biden’s social spending bill, presenting another probable blockade for Democratic leaders who endeavor for an agreement on the administration’s signature legislation.