Inflation rose 8.6% in May, the highest in more than 40 years. Consequently, the Federal Reserve recently hiked its benchmark interest by 75 basis points, the largest increase since 1994. Moreover, according to economists polled by Reuters, the central bank might undertake a 75 basis-point hike in July and a 50 basis-point increase in September.
The aggressive policy tightening by the Fed to combat high inflation led to brutal market turmoil and added fuel to existing recession fears. Recently, Goldman Sachs doubled the odds of a U.S. recession from 15% to 30%. Also, analysts at Citigroup Inc. (C) and Deutsche Bank (DB) predicted a 50% chance of a coming recession.
