Former New York Fed boss Bill Dudley said a recession is inevitable within the next 12 to 18 months.
If you’re still holding out hope that the Federal Reserve will be able to engineer a soft landing in the US economy, abandon it. A recession is inevitable within the next 12 to 18 months.
From a risk management perspective, better to act now, whatever the cost in terms of jobs and growth.While the Fed’s forecasts have become more plausible over time, I see several reasons to expect a much harder landing. Second, the new focus on price stability will be relentless. Fed officials recognise that failing to bring inflation back down would be disastrous: Inflation expectations would likely become unanchored, necessitating an even bigger recession later. From a risk management perspective, better to act now, whatever the cost in terms of jobs and growth. Powell does not want to repeat the mistakes of the late 1960s and the 1970s.
The broad US equity market is down more than 20 per cent, mortgage rates are up more than 2 percentage points and the dollar is up about 10 per cent against a broad basket of foreign currencies .
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