US economists: The Federal Reserve has cut interest rates too much, and the probability of the US falling into stagflation is 65%
Adam Posen, who has served at the Federal Reserve and the Bank of England, said in a speech this week, "We may fall into a recession, or we may not, but in any case we will face inflation." Posen, who currently serves as the director of the Peterson Institute for International Economics, has a significant influence and believes that there is a 65% chance of a recession.
As for the Federal Reserve, Posen believes that considering the still relatively high levels of inflation, it has already cut interest rates excessively. Once prices start rising again, the Federal Reserve may not be able to keep up with the changes. As a result, the Federal Reserve may be forced to quickly and significantly raise interest rates, putting additional pressure on the economy.
If all of this becomes a reality, Posen said, repairing this damage may take several years or longer.
