Torsten Slok: “The U.S. economy is so resilient that it’s hard to tame inflation… the won to stay weak for the time being”

Input 5:34 p.m. · 2026. 01. 12.

Hearing from Wall Street

(4) Torsten Slok, Chief Economist, Apollo Global

Hawks vs. doves at the Fed over the rate path

Policy could be swayed by political pressure

Key investment risks to watch

Fiscal expansion, inflation, excessive concentration in AI

Korea’s semiconductor outlook is positive, but

High sensitivity to AI also raises risk concerns

Torsten Slok, chief economist at U.S. asset manager Apollo Global Management (pictured), said the won’s weakness against the dollar (a rise in the won-dollar exchange rate) is likely to persist for the time being. In a recent written interview with The Korea Economic Daily, Slok cited the U.S. economy’s relative strength versus Korea’s. Slok is a Wall Street-watched economist known for his “Daily Spark” report.

▷President Donald Trump is pressuring the U.S. central bank (Fed).

“While the Fed may take a cautious stance, what matters is how markets interpret the Fed’s reaction. Inflation is still close to 3%, unemployment remains low, and financial conditions have already eased considerably. The Fed’s room to actually move (the policy rate) is limited.”

▷The Fed raised its outlook for U.S. growth this year and expects inflation to cool.

“It’s possible, but it’s a very narrow path. About two-thirds of today’s inflation is driven by demand-side factors, not supply. The fiscal boost is still running, and investment in artificial intelligence (AI) is accelerating. It’s not easy to envision inflation falling quickly to 2% (the Fed’s target) without a slowdown in growth.”

▷Differences within the Fed have widened.

“It’s meaningful as a signal that uncertainty inside the Fed is rising. As divisions widen, the effectiveness of forward guidance (with Fed Chair Jerome Powell steadying markets through communication) weakens, and markets price in greater volatility at every Fed meeting.”

▷So volatility stemming from those divisions is a risk.

“The real risk isn’t the disagreement itself, but policy deviating from the underlying inflation fundamentals (due to political pressure and the like).”

▷How serious is the cooling in the U.S. labor market?

“The labor market is cooling, but it’s not a recessionary phase. Initial jobless claims remain historically low, and while the unemployment rate has edged up, it’s still consistent with full employment by historical standards. The key question is how quickly AI adoption translates into productivity gains or labor displacement, and that has not yet been clearly reflected in macro indicators.”

▷The spread between long- and short-term U.S. Treasury yields is widening.

“Short-term yields (2-year) are falling while long-term yields (10-year) remain elevated, reflecting fiscal expansion, the term premium (higher yields for longer maturities), and inflation uncertainty. The current steepening is less a signal of a growth breakdown than a sign that confidence in (U.S.) policy is being put to the test.”

▷What do you make of the AI bubble argument?

“AI investment has now become a core driver of the macroeconomy, and hyperscalers’ capex is historically very high relative to cash flow. A large portion of that spending is being funded in cash, which has reduced near-term risks to financial stability. But if (investors’) expectations exceed the actual scale of profit generation, the risk doesn’t disappear. The broader economy is more exposed to AI, which raises the cost of being wrong.”

▷What risks should investors watch this year?

“The key is the interaction effects (among those factors). Fiscal policy remains expansionary, and inflation is sticky around 3% (not coming down easily), making it likely that rates will stay higher for longer. At the same time, markets are overly concentrated on the AI-related growth story. If that narrative shifts, it could trigger outsized shocks across equities, credit markets, and capital flows.”

▷Is the won’s weakness a temporary trend?

“It largely reflects global divergences. The U.S. economy has been relatively stronger, inflation is higher than in Europe, and rates are likely to stay higher for longer. Those factors are supporting the dollar. If global growth converges and rate differentials narrow, FX pressures could ease, but in the near term the macro backdrop still favors dollar strength (versus the won).”

▷AI is seen as a tailwind for Korea’s semiconductors.

“It appears we are moving away from a trade-war-driven slowdown and into a more supportive environment where fiscal stimulus and AI investment are ramping up in earnest. AI is reshaping the manufacturing cycle. Rather than a broad-based industrial recovery, capex is being concentrated in compute capacity, data centers, and power infrastructure. This is positive for Korea’s semiconductor industry over the long term, but it also increases sensitivity to the pace and durability of AI adoption.”

New York = Correspondent Park Shin-young nyusos@hankyung.com