PERSONALLY, I BELIEVE IT'S GONNA BE A DOOOZEY ONE!

Fed’s rate hikes likely to cause a recession, research says

Problem is, inflation is also slowing more gradually and more fitfully than it first seemed last year. Earlier this month, the government revised up consumer price data. Partly as a result of the revisions, over the past three months, core consumer prices — which exclude volatile food and energy costs — have risen at a 4.6% annual rate, up from 4.3% in December.

Those trends raise the possibility that the Fed’s policymakers will decide they must raise rates further than they’ve previously projected and keep them higher for longer to try to bring inflation down to their 2% target. Doing so would make a recession later this year more likely. Prices rose 5% in January from a year earlier, according to the Fed’s preferred measure.

Using the historical data, the authors project that if the Fed raises its benchmark rate to between 5.2% and 5.5% — three-quarters of a point higher than its current level, which many economists envision the Fed doing — the unemployment rate would rise to 5.1%, while inflation would fall as low as 2.9%, by the end of 2025.

Inflation at that level would still exceed Fed’s target, suggesting that the central bank would have to raise rates even further.