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United States Federal Reserve Rate Rises Could Lead to Recession πŸ™ƒ

The Nub

The U.S. Federal Reserve will raise rates by 50 basis points in September amid expectations inflation has peaked and growing recession worries, according to economists in a Reuters poll, who said the risks were skewed towards a higher peak.

Why Does it Matter

The world’s largest economy contracted in the first two quarters of the year, broadly the definition of a technical recession. “A recession is a necessary evil and the only way to get to where we want to be – where people don’t lose all their money to higher prices,” said Philip Marey, senior U.S. strategist at Rabobank.

What Next

While not explicitly hinting at a particular pace of coming rate increases, beginning with the Sept. 20-21 meeting, the minutes released on Wednesday showed U.S. central bank policymakers committed to raising rates as high as necessary to tame inflation – even as they began to acknowledge more explicitly the risk they might go too far and curb economic activity too much.

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