These days, the Federal Reserve is walking a knife’s edge.
High inflation is forcing its hand, and to tame it, the Fed has returned to Quantitative Tightening, hiking rates by 0.25% and promising 6-7 more hikes within this year.
But if the Fed hikes too much too fast, it risks driving the economy — which has been slowing dramatically recently — into recession.
A painful recession or persisting inflation. The Fed may very likely be forced to permit one in order to contain the other.
If indeed faced with that choice, which one will Jerome Powell pick?
For an answer to this vital yet very tricky question, we’re lucky to be joined by Jim Bianco of macro research firm Bianco Research.
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