Former IMF chief economist Kenneth Rogoff issued a harsh assessment of the economy, telling "Mornings with Maria," Thursday, that the U.S. is in a productivity recession, that wages are worse than they seem and the Fed's strategy is not enough to cool inflation as markets have not fully absorbed how much interest rates will climb.
KENNETH ROGOFF: I think they [Fed] are going to hike 75 but going to talk about hiking 1, that is not what they’re going to do. I think the Fed is going to keep hiking into the 4.5% range, maybe up to 5% at some point in 2023, and I think that is not necessarily going to be enough to cool inflation below 3.5% or 4%. The Fed is going to have a tough question to face. How long of a downturn are they willing to take?
How much do they mean it that inflation is the only thing they care about right now? But for the moment it is the only thing they care about right now. They are going to be raising interest rates sharply. The inflation numbers are terrible, and as I said, the wage numbers are worse than they seem. The cost of firms is going up faster than you’ve seen in wages because of changing working conditions.
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