U.S. Economist: The Fed Has Overcut Rates, 65% Chance of U.S. Stagflation

Jinse reports that Adam Posen, who has served at both the Federal Reserve and the Bank of England, stated in a speech this week, "We might fall into a recession, or we might not, but either way, we will face inflation." Posen, currently the president of the Peterson Institute for International Economics, is highly influential and estimates a 65% chance of recession. Regarding the Federal Reserve, Posen believes that given the currently still high level of inflation, it has overcut rates. Once prices start to rise again, the Fed may not be able to keep up with the changes. As a result, the Fed may be forced to raise interest rates rapidly and significantly, putting additional pressure on the economy. If this all comes to pass, Posen says, it may take years or longer to repair the damage.