WASHINGTON: History suggests that the United States Federal Reserve (Fed) will face a difficult task in tightening monetary policy enough to cool inflation without causing a US recession, with the odds of a contraction at about 35% over the next two years, according to Goldman Sachs Group Inc.
The Fed’s main challenge is to reduce the gap between jobs and workers, and to slow wage growth to a pace consistent with its 2% inflation goal by tightening financial conditions enough to reduce job openings without sharply raising unemployment, chief economist Jan Hatzius wrote in a research report.
