US Democratic Senator Elizabeth Warren (Elizabeth Warren) said on Sunday (28th) that the Federal Reserve (Fed) is likely to raise interest rates once more to curb high inflation, and she is very worried that the US economy will fall into recession as a result.
Fed Chairman Jerome Powell said last week in a speech at the annual meeting of central banks in Jackson Hole that the Fed’s job of reducing inflation has not been successful and will continue to raise interest rates for a while, warning that the U.S. economy will face “some pain” ahead. He also mentioned that historical experience, the Fed is worried regarding prematurely halting interest rate hikes, and the labor market is more likely to be hit more powerfully.
Warren noted that Ball’s reference to “some pain” means that people will face job losses and small business closures because rising interest rates will increase the cost of capital.
Warren also added that the current high inflation rate is also partly due to supply chain problems, the new crown pneumonia epidemic and the Russian-Ukrainian war.
Warren doesn’t think raising interest rates will do much, noting that none of the tools at Ball’s disposal would directly address these issues, which Ball acknowledged.
A previous survey of 70 corporate executives, shareholders and investors found that 46 percent expect the U.S. to enter a recession this year, 33 percent expect a recession next year, and 18 percent believe the U.S. is already in a recession. Only 3 percent expect the U.S. to avoid a recession.
The survey shows that most business people believe that high inflation and labor shortages are the biggest threats to corporate profits. 59% of respondents cited inflation as one of the top three risks to their company or portfolio. Meanwhile, 64% cite labor shortages as a risk, 54% worry regarding a recession and 53% worry regarding supply chain disruptions.