Forecasters see growing chance of a recession as Fed hikes rates this year to fight inflation

Forecasters have raised their outlooks for a recession and boosted their inflation outlook as the Federal Reserve faces the quandary of fast-rising prices and greater uncertainty from Russia’s invasion of Ukraine, according to the latest CNBC Fed Survey. The probability of recession in the US was raised to 33% in the next 12 months, up 10 percentage points from the Feb. 1 survey. The chance of a recession in Europe stands at 50%. Respondents debated whether the recent surge in commodity prices would prompt the Fed to raise rates faster because it adds to inflation or raise rates less because they reduce growth. “The tax impact of higher commodities prices is likely to slow the pace of hiking more than the inflationary impact is to accelerate it,” wrote Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.
Source: Economy