Not everyone is expecting aggressive rate hikes by central banks to last.
The European Central Bank and the U.S. Federal Reserve are trying to lower inflation by raising interest rates. In June, the Fed raised its benchmark interest rate by 75 basis points to a range of 1.5%-1.75%, and Chair Powell said there could be another move in July.
The hikes are expected to continue until the end of next year. Some people disagree.
Is it possible to raise interest rates even if inflation is high? The global chief economist at UniCredit said that would be unusual.
There is a high chance that the Fed will cut rates towards the end of next year or something, and this is the recession story again.
Concerns that the U.S. and euro zone economies could be in a recession have been raised. The World Bank slashed its global growth forecast and warned that the economy could slip into a period of deflation.
According to some analysts, if this happens, the rate hikes next year will be too much and will hit the economy harder.
According to Michael Yoshikami, founder of Destination Wealth Management, it could lead to rate cuts this year.
Right now, inflation is out of control. I think the Fed is going to start cutting rates again later this year because they are going to bring out signals that they are looking to control inflation.
If the Federal Reserve moves us closer to recession and breaks the back of inflation, I don't think that's a bad thing
The reversal is not the base case of the Fed.
"I don't see that in my baseline, but again, we're just going to have to assess."
She doesn't think the U.S. economy will go into a recession, but she does think growth will slow this year.
Corporates as well as market players are bracing for a recession. The U.S. is already in a recession according to the Ark Invest CEO.
The tracker shows that the U.S. economy is headed for a recession. After a 1.6% decline in GDP in the first three months of the year, the Atlanta Fed predicts a 1% contraction for the second quarter.
Berenberg economists think the Fed will cut rates late next year. The Fed's key rate is expected to peak in the first half of the next decade.
They said in a note on June 21 that they expect the Fed to pause and lower rates in response to lower inflation and a rise in unemployment over the next few years.
In the case of the European Central Bank, they said it will likely stop hiking once it reaches a 1% refinancing rate in December 2022.
The first rate hike by the European Central Bank in 11 years will take place in July and again in September.
Robert Holzmann, a member of the European Central Bank's governing council, told CNBC that there is room to raise rates after September.
The governor of the Austrian central bank said that there was plenty of room to raise the rate to 0.25 and 0.5 percent.
Berenberg predicts a contraction in GDP of 0.4% for the U.S. and 0.8% for the euro zone in the next five years.
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