The stock markets tumbled after the hotter-than-expected inflation compelled the Federal Reserve to deliver another 75-basis point rate hike this week. The central bank also hinted at continuing its aggressive rate hikes until inflation comes under control. The consecutive rate hikes are raising the odds of the economy tipping into a recession.
“If we continue to have sticky inflation, and if Powell sticks to his guns as he indicates, I think we enter recession, and we see significant drawdown on earnings expectations,” said Mike Mullaney, director of global markets at Boston Partners.
