,Investors have become increasingly concerned that high inflation in advanced economies amid the Russia-Ukraine war-inflict supply disruptions and price shocks, coupled with the US Federal Reserve’s (Fed) aggressive hike in interest rates, could tip the US economy into a recession. The Fed and other major central banks have contended to fight inflation so as to prevent a dangerous de-anchoring of inflation expectations via two reinforcing forces of supply cum cost driven and demand-pull (wage-price spiral).皇冠 怎么 注册(www.hg9988.vip)是皇冠体育官方线上24小时为您解决皇冠 怎么 注册、皇冠代理 怎么 开户、皇冠会员 怎么 注册等问题。
MORE and more investors are worried about a sharp slowdown in the global economy as strong stagflation risk hammering growth, compounded by higher interest rates and tighter financial conditions.
There are definitely concerns about whether a US recession could come sooner than expected, which is likely in 2023.
Investors have become increasingly concerned that high inflation in advanced economies amid the Russia-Ukraine war-inflict supply disruptions and price shocks, coupled with the US Federal Reserve’s (Fed) aggressive hike in interest rates, could tip the US economy into a recession.
The World Bank has warned that the world economy is entering a protracted period of feeble growth and elevated inflation, cutting its global growth forecasts to 2.9% for 2022 from 4.1% previously.
The pace of growth will be around 2.9% in 2023 to 2024 and many countries are likely to face recession, it added.
Stagflationary shocks, which reduce growth and increase inflation both are putting major central banks in a dilemma as it requires a delicate balancing act between sustaining economic growth and fighting inflation.
The Fed and other major central banks have contended to fight inflation so as to prevent a dangerous de-anchoring of inflation expectations via two reinforcing forces of supply cum cost driven and demand-pull (wage-price spiral).
It is not an easy task for the Fed to suppress inflation while averting a hard landing or recession.
Many past recessions were due to excessive tightening or policy missteps by the Fed. The 1981 to 1982 US recession was triggered by tight monetary policy in an effort to fight mounting inflation.
Following the Fed’s beginning of rate tightening cycle and its balance sheet purchase starting June 1, bond yields have risen higher, financial conditions have tightened, credit spreads have widened plus there is volatility in the financial and foreign exchange markets.
The familiar precursor of a recession is an inverted yield curve on March 29 – for the first time since 2019, as short-term treasury bills yield was higher than that of the longer-dated treasuries.
This is a sign that investors are losing confidence in the economy as the stubbornly high inflation continues to bite, along with rising interest rates and the shrinking of quantitative easing (QE) will hit household consumption and business spending.
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