America's battle against inflation may soon end in recession

Bye, bye, Goldilocks

Experts say the US Federal Reserve must now push the economy into recession

Yesterday, April 15, 2024 | 5:17 pm

In an interview with Bloomberg TV Many American economists have expressed the view that the Fed will eventually have to lead the US economy into recession in order to stop inflation. Inflation can no longer be stopped in any other way.

“If we continue to see inflation data like [jene vom März] “The Fed will realize it has no choice but to cause a recession if it wants to reach its 2% inflation target,” said Ian Lingen, head of US strategy at BMO Capital Markets.

The latest data on Thursday showed that US inflation rose unexpectedly by 3.5 percent year-on-year in March. Experts had expected only 3.4 percent. Inflation was also higher than in January and February this year.

Stock markets around the world collapsed after US inflation numbers

Frances Donald, chief economist at Manulife Financial, also agrees with this assessment “Interested in business.”

“Now that we are back in an area where previous expectations of interest rate cuts look wrong, we need to reduce the likelihood of bad events. [für die Börsen] “Lift up,” Donald said. “[Die US-Notenbank] You will have to keep the interest rate high until something happens [in der Wirtschaft] Collapses. it's a problem.”

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Interest rates affect the entire economy

The US Federal Reserve regularly sets the so-called key interest rate for the US economy. Simply put, higher interest rates lead to more expensive loans. The more expensive loans become, the fewer companies and individuals will borrow money. By using less money, businesses and individuals can also invest less money, making economic growth more difficult.

Right now, US citizens and US companies are – once again quite simply – spending too much money to lower prices. The greater the demand for products and services, the higher prices can be set.