The latest Consumer Price Index (CPI) report stoked wild swings in the market and has increased the prospects of further rate hikes by the Fed. An elevated inflation level for longer-than-expected could expand the effect of the Fed’s policy tightening, thus pushing the economy into a recession.
With inflation showing no signs of abating, the rate-setting Federal Open Market Committee lowered its GDP projections in the September meeting and now expects it to grow at an annualized pace of 0.2% in 2022 and 1.2% in 2023, significantly below the 2021 trend.
