With inflation hovering around its four-decade peak in June last year, the Federal Reserve is committed to returning inflation to its 2% target. During its December meeting, the Fed raised its federal fund's rate target to 4.25%-4.5%. Moreover, policymakers predict that interest rates will remain high for longer, and the terminal rate to reach as high as 5.1% this year.
Since a series of the Fed’s aggressive rate hikes are adding fuel to a stagnating economy, the likelihood of a U.S. recession has jumped to 70%, according to economists surveyed by Bloomberg. The survey showed that the recession probability has increased from 65% in November and more than doubled over the past six months.
