Seth Carpenter, Morgan Stanley’s global chief economist, is warning that the Fed could let an economic slowdown last until 2025 if that’s what it takes to bring inflation down. “They said that they want to tighten policy, to be restrictive, so that inflation gets back to target, but then they said ‘over time’ and I think it’s fair to ask what does that mean,” he told CNBC’s ‘Halftime Report’. “The last time they did their projections, ‘over time’ meant at least three years for inflation to get back to their target.” Meanwhile, Harvard economist Kenneth Rogoff is warning that the U.S. is headed for a “significant recession.”

Business Insider/George Glover
The Fed could let the slowdown last up to 3 years to bring inflation down, top Morgan Stanley economist says

The Federal Reserve could be prepared to let any economic slowdown last until around 2025, if that’s necessary, to bring inflation down to its 2% target level, according to Seth Carpenter, Morgan Stanley’s global chief economist.

Carpenter said Thursday that the US central bank’s shift towards more gradual tightening could mean it now favors taming soaring prices over a longer period of time, rather than doing so by triggering a short but sharp recession.

“They said that they want to tighten policy, to be restrictive so that inflation gets back to target, but then they said ‘over time’ and I think it’s fair to ask what does that mean,” he told CNBC’s ‘Halftime Report’. “The last time they did their projections, ‘over time’ meant at least three years for inflation to get back to their target.”

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Fox Business/Kristen Altus
Harvard economist warns US headed for ‘significant’ recession

Harvard economist Kenneth Rogoff issued a dire warning about the U.S. economy one day after Federal Reserve Chairman Jerome Powell maintained a hawkish stance.

“You really have to look at the world, which is in bad shape,” the economics professor told “Mornings with Maria” on Thursday. “So it’s very hard for the United States to resist that. I worry that not only we’re going to get a mild recession, I think the chances that we’ve got a significant recession are really pretty high.”

The Federal Reserve on Wednesday raised its benchmark interest rate by 75 basis points for the fourth straight month as it struggles to bring runaway inflation under control, a move that threatens to further slow U.S. economic growth and exacerbate financial pain for millions of households and businesses.

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Kitco News/Anna Golubova
Gold price to trade at $1,700 next year as Fed, dollar outlooks shift, says Capital Economics

Even though gold prices tumbled in response to Federal Reserve Chair Jerome Powell’s hawkish stance, gold’s path during the next year will be defined by gains, Capital Economics said in its latest outlook.

“We forecast [gold and silver] prices to rise from $1,630 and $18 per ounce today to $1,700 and $19.5 by end 2023,” said Capital Economics commodities economist Edward Gardner.

The Fed has confused the markets with its mixed messages following its fourth 75-basis-point hike Wednesday. In the statement, the U.S. central bank said it will now consider “the cumulative tightening” of monetary policy and “the lags with which monetary policy” affects economic activity and inflation.

Continue reading, here.

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