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Fed could 'break' the economy with aggressive rate hike campaign, analyst says
Fed taking a risk by raising interest rates 75 basis points: Jon Hilsenrath
The Wall Street Journal senior writer discusses the chance of recession on ‘The Claman Countdown.’
Wall Street is increasingly skeptical that the Federal Reserve can crush inflation without also triggering an economic recession as the U.S. central bank hikes interest rates at the fastest pace in decades.
Central bank policymakers on Wednesday approved a 75 basis point interest rate hike for the first time since 1994 as they race to catch up with runaway inflation.
Another hike of that magnitude could be on the table in July amid signs of stubbornly high inflation, Chairman Jerome Powell told reporters after the meeting, prompting investors to reassess the economic outlook.
"The Federal Reserve is going to hike interest rates until policymakers break inflation, but the risk is that they also break the economy," Ryan Sweet, the head of monetary policy research at Moody’s Analytics, said in an analyst note.
INFLATION TIMELINE: MAPPING THE BIDEN ADMIN'S RESPONSE TO RAPID PRICE GROWTH
"Growth is slowing, and the effect of the tightening in financial market conditions and removal of monetary policy has yet to hit the economy."