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The Fed's fight against inflation may result in economic crash in the U.S.

14 September 2022 283
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Most analysts assume that Jay Powell will announce another 0.75 percentage point hike at the Fed meeting.

 

Nomura economists adjusted their forecast for the Fed's September meeting from a 0.75 percentage point hike to a 1 percentage point increase, referring to the fact that "a more aggressive path of interest rate hikes will be needed to combat increasingly entrenched inflation".

 

In any case, the recipe for the Fed is to stay the course and keep raising rates, which should eventually cause prices to go down as consumers and manufacturers focus on higher borrowing costs. But it is becoming more and more likely that the Fed will only be able to do this by suppressing demand so much that the economy will fall into recession. Powell and company are making a bet that the short-term pain of recession is preferable to the long-term pain of rampant inflation.

 

 

Source: Edition.cnn.com

This content is for informational purposes only and is not intended to be investing advice.

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