What are Deutsche Bank Research's baseline views for the US economy and monetary policy? Could the pending recession be worse than expected? Can the Fed relieve pressure in the labour market without significantly raising unemployment? What needs to go right for the Fed to avoid a hard landing? How might the recent sharp tightening of financial conditions impact the Fed’s response?
In a new episode of Podzept, Peter Hooper, Matthew Luzzetti and Matthew Barnard discuss how the US economy is the furthest away from the Fed’s targets in forty years. They argue that this gap, captured by persistently elevated inflation and a historically tight labour market, is likely to necessitate a more aggressive response from the Fed that ultimately leads to a recession by the end of next year.
Listen to the full podcast here