The Federal Reserve may inadvertently trigger an economic recession next year as it moves to tame the hottest inflation in four decades, according to Goldman Sachs economists.
The economists, led by Jan Hatzius, said in an analyst note that the expected policy tightening trajectory the U.S. central bank is about to embark on raises the odds of a recession to 15% in the next 12 months and 35% within the next 24 months. Hatzius noted that 11 of the 14 tightening cycles since World War II have been followed by a recession within two years, though only eight of them can be partially attributed to Fed policy.
In this Dec. 1, 2020 file photo, Federal Reserve Chair Jerome Powell listens during a Senate Banking Committee hearing on Capitol Hill in Washington. "If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so," Federal Reserve Chairman Jerome Powell said in March. "And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well."
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