While many economists and the Federal Reserve thought that the initial price rises in the middle of 2021 were “transitory,” inflation is still high more than a year later. On top of it, the U.S. labor market has remained persistently tight over recent months, putting upward pressure on wages.
As the persistently high inflation pressures the Federal Reserve to combat it aggressively, former Boston Federal Reserve President Eric Rosengren believes a recession in the U.S. is “quite likely” next year. Rosengren told CNBC that the U.S. central bank now looked likely to increase its terminal policy rate to more than the 5% forecast by investors, pushing the economy into a mild downturn in 2023.
