Citi sees a 40% chance of US recession going into next year and expects the Fed's policies to take up to 18 months to take effect

By next year there is a 40% chance that the US economy will fall into a recession.

Bitterly told CNBC that it could take up to 18 months for the Fed to control inflation.

Going into next year, we have a 40% chance of a recession. She said that we wouldn't see that until next year because the tightening around the Fed takes around 12 to 18 months to show up in economic conditions.

The Fed lifted its benchmark rate by 0.75 percentage points last week in the face of soaring inflation, which ran at 8.6% in May, far above economists' expectations.

As rising interest rates and intense price pressures spread to areas of the real economy such as housing, food and energy, fears of a recession are growing. Americans are searching for the word "recession" more often than at any point in the last decade.

The consumer is not the only one who is depressed. Wall Street economists think there is a possibility of a recession. The risks are on the rise after the Fed's rate increase. According to Morgan Stanley, there is a 40% chance of a recession over the next year, compared to Goldman's 30%.

There will be a lot of volatility over the next few months. The market is going to debate if this is a recessionary bear market or not.

"Our base case is to see some resilience at 45%, but that will require some very strong finessing from the Fed and some abatement from a recession over the next couple of months." She said to expect volatility

She said that investors have to prepare for either a resilient scenario or a recession. The difference between where we're trading right now in equities and where we could be is what we're looking at right now.