AI-powered
podcast player
Listen to all your favourite podcasts with AI-powered features
Christopher Zook explains that the current economic trajectory is leading towards a recession and stagflation, where there is stagnant economic growth combined with high inflation. Despite initial optimism in the markets, the most likely outcome is a 'higher for longer' interest rates scenario, even if the Fed pauses its rate hikes momentarily. This is because the Federal Reserve is in a delicate position, where cutting rates too quickly could risk loss of credibility, and keeping rates too low could lead to a deep recession. The Fed's mandate of a 2% inflation target suggests that rates may need to stay higher than expected for a longer period of time.