Diane Swonk suggests that Federal Reserve's rate hikes may lead to an 'overshoot,' raising the likelihood of a severe recession.

Diane Swonk, chief economist at KPMG and CNBC's Steve Liesman, discuss the state of the U.S. economy and whether the chances of a 'hard landing' for the Fed could happen. For access to live and exclusive video from CNBC subscribe to CNBC PRO: » Subscribe to CNBC TV: » Subscribe to CNBC: Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide. Connect with CNBC News Online Get the latest news: Follow CNBC on LinkedIn: Follow CNBC News on Facebook: Follow CNBC News on Twitter: Follow CNBC News on Instagram: #CNBC #CNBCTV ...(read more)

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The Federal Reserve, America's central bank, is facing growing concerns over the risks associated with its decision to continue raising interest rates. According to renowned economist Diane Swonk, this move is potentially opening the gates for an "overshoot" that could send the country into a severe recession. Swonk, the chief economist at Grant Thornton, warns that the Fed's relentless pursuit of higher rates without considering the wider economic environment could result in disastrous consequences. While the central bank's objective is to maintain stable inflation levels and prevent the economy from overheating, it also needs to take into account the vulnerability of other sectors. The Fed has been gradually increasing interest rates in recent years, aiming to strike a balance between a strong economy and stable inflation. However, Swonk worries that the rate hikes will push borrowing costs too high, thereby hampering individuals and businesses alike. This risks curbing consumer spending, impacting housing markets, and potentially sparking a downturn that could plunge the economy into a deep recession. In this era of interconnectedness, it is crucial for central banks like the Fed to consider the global implications of their decisions. Swonk argues that the raised interest rates may attract international capital, strengthening the dollar. This, in turn, could weaken emerging market economies, leading to potential financial crises or currency wars. Furthermore, there is a concern that the Fed has become too focused on inflation as a sole indicator of economic well-being. By excessively raising interest rates to combat inflation, the central bank may overlook other factors such as wage growth, labor market dynamics, and investment levels. Neglecting these areas could lead to a severe downturn in the long run. Swonk's worries about a potential overshoot are not without foundation. History has shown that Fed tightening cycles have often preceded economic recessions. The central bank needs to strike a careful balance between curbing inflation and supporting economic growth. The current global economic uncertainties further amplify the risks associated with aggressive rate hikes. Trade disputes, Brexit, and geopolitical tensions are all factors that could exacerbate the negative impact of a potential recession triggered by an overshoot in rate hikes. It is crucial for the Federal Reserve to reassess its current strategy and take a more cautious approach. A willingness to adapt and consider the broader economic landscape, as well as the potential risks associated with aggressive rate hikes, is vital to preventing a deep recession. Monetary policy should concentrate on addressing not only inflation but also other key factors that contribute to a healthy and sustainable economy. Ultimately, the issue lies in finding the delicate balance between maintaining desirable inflation levels and safeguarding against an economic downturn. As Diane Swonk points out, an overshoot on rate hikes carries significant risks and could ultimately lead the United States and potentially the global economy into a deep recession. https://inflationprotection.org/diane-swonk-suggests-that-federal-reserves-rate-hikes-may-lead-to-an-overshoot-raising-the-likelihood-of-a-severe-recession/?feed_id=117755&_unique_id=64b33be86c27a #Inflation #Retirement #GoldIRA #Wealth #Investing #breakingnews #business #CNBC #economy #Finance #investing #kellyevans #money #news #newsroom #politics #Stocks #theexchange #WallStreet #RecessionNews #breakingnews #business #CNBC #economy #Finance #investing #kellyevans #money #news #newsroom #politics #Stocks #theexchange #WallStreet