Peterson Inst.'s Posen Sees Rising Risk of Recession

The video discusses the challenges faced by the Federal Reserve in managing inflation without causing a recession. It highlights the historical difficulty of such actions and the potential for policy mistakes. The possibility of a growth recession, where growth slows without significant unemployment, is considered. Current financial conditions are better than in previous cycles, which may help keep inflation expectations anchored. The video concludes with a discussion on the potential extent of rate hikes needed to control inflation.

What is the significance of inflation expectations being anchored?

What are the potential outcomes of the Fed's current policy decisions according to the speaker?