U.S. inflation accelerated to an 8.5 percent annual rate in March, heightening fears of a recession.
Some economists believe that regaining control of prices will require far more aggressive rate hikes by the Federal Reserve, which may topple the U.S. economy into a recession.
Wall Street analysts are already projecting a downturn for next year. Last week, Deutsche Bank became the first large bank to foresee a recession in 2023. The further Fed tightening is projected to have a significant impact on the U.S. economy by late next year and early 2024, according to the bank.
Bank of America has a similarly pessimistic outlook. Chief investment strategist Michael Hartnett stated in a recent note that the Fed’s belated response to “out-of-control inflation” would lead to a recession. In one sentence, he summed up the bank’s position: “‘Inflation shock’ worsening, ‘rates shock’ just beginning, ‘recession shock’ coming.”
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