#yahoofinance #fedratehike #recession #q4
Fed officials are reportedly staying the course of their preferred inflation target. Could the Fed’s rate hiking strategy require a recession to happen? FS Investments Chief Market Strategist Troy Gayeski joins Yahoo Finance Live to discuss the Fed’s inflation outlook and alternative investing strategies ahead of a looming recession. This segment originally aired on June 30, 2023.
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BREAKING: Recession News
LEARN MORE ABOUT: Bank Failures
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Future Fed rate hikes could cause recession to ‘start as soon as Q4’: Strategist
The Federal Reserve’s decision-making on interest rates has always been closely watched by economists and financial analysts around the world. These rate hikes have often been seen as a way to control inflation while fostering economic growth. However, recently a growing concern has emerged among strategists that future Fed rate hikes could actually trigger a recession, potentially as early as the fourth quarter of this year.
The argument for this scenario is rooted in the fragile state of the global economy. Several factors have come together to create a perfect storm that threatens the stability of markets. One of the key elements is the current sluggish global growth, which has already shown signs of vulnerability in major economies such as China and Germany. These weakened economies, combined with ongoing trade tensions, could easily tip the scales towards a recession.
Another factor is the ballooning debt levels across the world. Many countries have been borrowing significantly to finance their operations and stimulate growth. With interest rates already low, any future rate hikes would increase the cost of servicing this debt, putting immense pressure on already strained economies. The fear is that higher interest rates would result in a wave of defaults and bankruptcies, which could trigger a domino effect throughout the global economy.
Furthermore, the current backdrop of global trade conflicts adds further risk. With the United States engaged in tariff disputes with major partners such as China and Europe, trade flows have already been disrupted, hampering economic growth. An interest rate hike by the Federal Reserve could exacerbate these negative effects, potentially pushing the world into a full-blown recession.
The strategist’s concerns are also amplified by the historically low levels of unemployment, coupled with the absence of significant wage growth. This situation makes it difficult for central banks to manage inflation effectively. The Fed has been cautious with its rate hikes, but it remains uncertain whether this approach will be sufficient to control inflation without pushing the economy over the edge.
It’s worth noting that not everyone shares these concerns. Some economists argue that the global economy is resilient enough to withstand future rate hikes. They believe that the potential benefits, such as averting asset bubbles and excessive risk-taking, outweigh the risks of a possible recession. Nevertheless, caution remains the prevailing sentiment among many strategists who fear that a misstep by the Federal Reserve could have dire consequences.
In conclusion, while the Federal Reserve’s rate hikes have traditionally been seen as a tool for economic growth, there is growing worry among some strategists that future hikes could instead trigger a recession. A combination of factors, including weakened global growth, high debt levels, trade conflicts, and stagnant wage growth, are all contributing to the apprehension. While the future remains uncertain, it is vital for policymakers to carefully evaluate the potential risks and consequences before implementing further rate hikes. The global economy, already teetering on the edge, cannot afford any missteps that could push it into a recession.
Raise those rates.
Well ueah, they’ve got an economy to crash and a controlling CBDC Slavecoin to promote! You don’t think they can do that with a rosey economy do you? Absolutely not! They want to bring on the slavery!
With inflation in the United States still excessive, most Federal Reserve officials expect to raise interest rates further this year, Chairman Jerome Powell has told a House of Representatives committee.
Every time they predict just triple the time frame . Recession will be 2025.
I wanna see 2008 2.0. Make home prices plummet and retailer investors pull out of the market to pay student loans.
I'm just going to keep it a 1000 WE ARE ALREADY IN A RECESSION THESE F#^KER ARE GOING TO LEAD US INTO A DEPRESSION/HYPERINFLATION THEN THERE GOING TO CALL IT A RECESSION AND AROUND THAT TIME INTRODUCES US TO THERE MARK OF THE BEAST 666 CBDC. BEEN SAYING THIS FOR A YEAR GET YOUR PHYSICAL GOLD AND SILVER.
Fed is making progress, full of crap and everyone knows it.
We've been in a recession for over a year based on true "value" of assets, good and services. Every corporation and business out there should be having 40% more profit in comparison to 2020 just to keep up with real inflation. Media however advertises "numbers" that falsely show a progress without taking into consideration inflation. Print another 5 Trillions in the next year and i guarantee the GDP and other economic metrics will grow considerably more because of inflation, not actual performance.
Thought the recession was going to be Q1…. then Q2…. then Q3… now Q4…………… lol these strategist are about as accurate as weather men
일본이 핵 폐수를 바다에 버리는것을 꼭 막아주세요~~~~~~~
FED rate hikes got a lag of 12 to 24 months. One or 2 more 25 basispoint increases will do nothing in the short term with there is 1-2 years of lag effect. All real experts knows this. The recession is already baked in the cake. The downside is more than 25%. Also the title is totally misleading. The expert said that future rate hikes will increase the probability of recession but they already think the recession will start in Q4 2023. He did not say future rate hikes will cause the recession.
Come on.. the illegal useless fed has tried so hard for another recession to serve the ultra wealthy. Try a little harder. Another rate hike please…
This is stupid.
Only a strong recession can save this economy.
Home values should drop by 40% for sanity to return
I think what he meant is always be prepare for smt big to happen that can drive down the market again. Now when the market down it is time to buy and hodl. With the new limitations between USA and China that will definitely affecting manufacturing especially China is targeting tech sector so be ready any given moment imo. It's been a short while nothing big happen so just be prepared. But with the trend of the market is really easy to think that bear is not coming back anytime soon. Bull seems to be charging real hard. Just look at fear and greed index unbelievably through the roof. I can only buy good dividend reits or finances so far. Hodl.
Cool story bro, you're whining that your fund is gonna have to borrow at higher rates to flip equities.
basically this idiot miss uptrend. keep buying ladies and gentlemen
20-25% downturn is crazy
Zero rate economic theory has been a complete disaster
Japan is a living example as it's economy has been in a zero rate 10 years longer than the rest of western economies.
Zero rate economies push public debt into an extreme state as seen by Japan's public debt ration to GDP is now 265%
Canada is the highest in the group of 7 nations at 110%
Once these high levels of debt are established it destroys the economy as inflation start to eat away any chance of recovery.
The nations debt then becomes a hindrance to raise the bank rate to lower inflation levels. Hence the economy stalls and is facing a Mexican standoff, with no winning solution.
The Fed kept rates near zero for years…and now the US economy is supposed to be so great that rates above 5% are meaningless….OK LOL.
Kötü ekonomiye rağmen her 10 günde bir 4.500$'lık yatırımdan 18.000$ aldığım için mutluyum…verdiği nimetler için Tanrıya şükür…blogcular harika.