Harvard University economics professor Kenneth Rogoff warned on Friday that it would be “really difficult” to drive down the “rate of inflation” without causing a recession.
“Yes [the Fed] having to raise interest rates that much, it will cause a recession, no doubt,” Rogoff told “Cavuto: Coast to Coast.”
“I don’t think they’ll go that far. My best guess is that they fail. They raise interest rates to 3-3.5, and we end up with a very soft economy and still inflation .”
HOT INFLATION IS PROBABLY COSTING YOU $311 MORE A MONTH
Rogoff’s comments follow the Senate’s confirmation of Jerome Powell for a second term as Federal Reserve chairman, as policymakers try to manage record inflation.
He stressed that once inflation “gets out of control”, it will not be easy to “bring it under control”.
Meanwhile, the Harvard economist noted that multiple tumultuous events are impacting the US economy, in addition to the Fed “letting inflation spiral out of control.”
“It’s not just what the Fed is doing. The shutdowns in China, [and] their COVID policy, which is a political issue. It’s hard to overstate how bad it is, they stunt growth,” Rogoff explained.
“It’s a supply shock that keeps happening, driving up prices, driving down productivity. The war in Ukraine [is] part of… driving up gas prices, it drives up food prices. »
Cavuto asked Rogoff what inflation means for the stock market.
LEARN MORE ABOUT FOX BUSINESS
He replied that there wasn’t a lot of “good news to set things straight”.
“The stock market kind of absorbs all of that. Some things like tech stocks are particularly interest rate sensitive,” he concluded.
GET FOX BUSINESS ON THE ROAD BY CLICKING HERE
“[Tech stocks are] seeks to make big profits [for] long into the future, and they got tougher.”