Fed faces twin threats of recession and financial crisis as its inflation fight raises risks of both

(THE CONVERSATION) There is wide agreement among economists and market observers that the Federal Reserve's aggressive interest rate hikes will cause economic growth to grind to a halt, leading to a recession. The Fed again expanded its balance sheet drastically in 2020 to provide support, or l...

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Bibliographic Details
Published in:Rochester Business Journal 2022-11, Vol.38 (24), p.15-15
Main Author: Blank, D Brian
Format: Article
Language:English
Subjects:
Balance sheets
Borrowing
Central banks
Economic conditions
Economic crisis
Financial institutions
Inflation
Pandemics
Prices
Recessions
Securities markets
Treasuries
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Summary:(THE CONVERSATION) There is wide agreement among economists and market observers that the Federal Reserve's aggressive interest rate hikes will cause economic growth to grind to a halt, leading to a recession. The Fed again expanded its balance sheet drastically in 2020 to provide support, or liquidity, to banks and other financial institutions so the financial system didn't run short on cash. Since these investments are considered risk-free, any possible risk has substantial consequences - as happened in 2008 and 2020.
ISSN:0896-3274