Investors have become increasingly concerned that high inflation in advanced economies amid the Russia-Ukraine war-inflict supply disruptions and price shocks, coupled with the US Federal Reserve’s (Fed) aggressive hike in interest rates, could tip the US economy into a recession. The Fed and other major central banks have contended to fight inflation so as to prevent a dangerous de-anchoring of inflation expectations via two reinforcing forces of supply cum cost driven and demand-pull (wage-price spiral).
MORE and more investors are worried about a sharp slowdown in the global economy as strong stagflation risk hammering growth, compounded by higher interest rates and tighter financial conditions.
There are definitely concerns about whether a US recession could come sooner than expected, which is likely in 2023.
