Kristina Hooper, an economist at Invesco, a global investment firm managing $1.3 trillion, warned that the Federal Reserve is playing a “dangerous game” with its 75 basis point rate hikes. She noted that the Fed’s action could lead to “a significant recession“.
Invesco’s chief strategist on the recession and the Fed’s efforts to fight inflation.
Last week, Kristina Hooper shared her thoughts on the U.S. economy on the podcast What Goes Up from Bloomberg. Invesco is a global independent investment management firm with more than $1.3 trillion in assets under management as of Sept. 30. The company employs more than 8,400 people in more than 26 countries.
Kristina Hooper explained that the stock market has become very volatile as the Federal Reserve continues its efforts to fight inflation. She noted that the central bank has indicated that it will not let up until inflation is brought under control, even if that means problems for the economy. She added that the Fed could raise interest rates by another 75 basis points at the next Federal Open Market Committee (FOMC) meeting in November, and the same in December.
Kristina Hooper warned, “75 is the new 25 … When you raise rates in 75 basis point increments and don’t give that measure time to pass and work its way through the data, you’re playing a dangerous game.“She concluded:
The more you do it, the more you create a probability of having a recession – and a significant recession.
Many people have warned of a recession. A recent survey shows that 98% of business leaders are preparing for a recession in the US, while 99% are preparing for a recession in the EU.
Tesla CEO Elon Musk said last week that the recession could last until spring 2024. Goldman CEO David Solomon sees a good chance of a recession, advising investors to be cautious. JPMorgan Chase CEO Jamie Dimon said a recession could hit the U.S. economy in six months.
Investor Jim Rogers warned that the recession will be the worst in his lifetime. Economist Peter Schiff also believes the Federal Reserve’s action could lead to a severe recession, in addition to stock market crashes and a massive financial crisis.