The Fed may have no choice but to tip the US into recession, economist says

[maverick19]

The latest inflation report not only sent bond yields soaring and stocks plunging, it may also have put the US back on track for a recession, one economist told Bloomberg TV on Thursday. The catch: such a downturn would be one self-induced by the Federal Reserve.

"If we continue to get inflation prints at these levels, the [Federal Reserve] is going to find itself backed into a corner where they need to cause a recession if they're going to hold that 2% inflation target," Ian Lyngen, BMO Capital Markets head of US rates strategy, said.

His comments follow after March's consumer price index came in hotter-than-expected on Wednesday, increasing 3.5% on an annual basis, against 3.4% year-over-year forecasts. The rate was higher than both January and February prints.

This has essentially crushed market bets on a quick interest rate pivot from the Fed, with futures markets no longer counting on June as the starting point for easing. Instead, a majority of investors are eyeing September as more likely, according to the CME FedWatch Tool — though odds are below 50%.

The recession risk from the Fed may come as the central bank realizes that its current fed funds rate of 5.25% to 5.50% isn't restrictive enough to clamp down on inflation, Lyngen said. 

This echoes recent warnings that others have put out, that the Fed could be pressured to pursue a rate hike.

Frances Donald, who also took part in the Bloomberg interview, agreed, noting that recession risk is increasing as the Fed loses data support to cut in the near term.

"Now that we're back to an environment where we're losing those embedded rate cuts, we actually have to increase the chance of something bad happening here," the chief economist at Manulife Investment Management warned, adding: "They may have to stay higher until something breaks. That's the problem."

Some have suggested that it's time for the Fed to instead adjust its inflation target rate to 3%, and in doing so ease these risks. 

Leading economist Mohamed El-Erian is among this cohort, recently warning that interest rate policy will have to remain unchanged for years if the Fed wants to reach 2% inflation.

 

 

[Gaali_Gottam_Govinda]

Powell uncle Biden tatha ni malli president gaa choodali anta...... anduke ee rate cut pumping. ignoring all the market fundamentals

[dealmaster]

Anni forget bro.

 

Stock market just brushed of yesterday inflation report

 

And in single day recovered alm losses on nasdaq .

 

 

We are living in greatest bull rally in last 25 years.

 

 

Don't miss dips and no recession till Nov 2024

[phatposts]

2y treasuries emo 5% ki potunte recession kaaka emostadi mari

[megadheera]

Adi avvadamma….

[Variety_Pullayya]

1 hour ago, maverick19 said:

The latest inflation report not only sent bond yields soaring and stocks plunging, it may also have put the US back on track for a recession, one economist told Bloomberg TV on Thursday. The catch: such a downturn would be one self-induced by the Federal Reserve.

"If we continue to get inflation prints at these levels, the [Federal Reserve] is going to find itself backed into a corner where they need to cause a recession if they're going to hold that 2% inflation target," Ian Lyngen, BMO Capital Markets head of US rates strategy, said.

His comments follow after March's consumer price index came in hotter-than-expected on Wednesday, increasing 3.5% on an annual basis, against 3.4% year-over-year forecasts. The rate was higher than both January and February prints.

This has essentially crushed market bets on a quick interest rate pivot from the Fed, with futures markets no longer counting on June as the starting point for easing. Instead, a majority of investors are eyeing September as more likely, according to the CME FedWatch Tool — though odds are below 50%.

The recession risk from the Fed may come as the central bank realizes that its current fed funds rate of 5.25% to 5.50% isn't restrictive enough to clamp down on inflation, Lyngen said. 

This echoes recent warnings that others have put out, that the Fed could be pressured to pursue a rate hike.

Frances Donald, who also took part in the Bloomberg interview, agreed, noting that recession risk is increasing as the Fed loses data support to cut in the near term.

"Now that we're back to an environment where we're losing those embedded rate cuts, we actually have to increase the chance of something bad happening here," the chief economist at Manulife Investment Management warned, adding: "They may have to stay higher until something breaks. That's the problem."

Some have suggested that it's time for the Fed to instead adjust its inflation target rate to 3%, and in doing so ease these risks. 

Leading economist Mohamed El-Erian is among this cohort, recently warning that interest rate policy will have to remain unchanged for years if the Fed wants to reach 2% inflation.

 

 

[human1234]

People have lots of money. No one cares. Every dip in stock market, it bounces back even higher.