Recession or no recession? That is the question. Well, not according to Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis. He says people should be focusing on inflation rather than a potential recession because it’s a bigger threat. “I’m focused on the inflation data. I’m focused on the wage data. And so far, inflation continues to surprise us to the upside…” News that we’re technically in a recession—based on the old definition—caused the dollar to sink to one-month lows on Monday. Analysts at DailyFX say, “It’s likely that we’re going to see a relatively more dovish Fed moving forward, whereby even if there are more rate hikes, they’re unlikely to be at the same 75-bps pace we’ve seen over the past two meetings – which is not good news for the US dollar.”

 

CNBC/Cameron Albert-Deitch
Are we in a recession? It doesn’t matter, Fed official says: ‘I’m focused on the inflation data’

If you’re debating whether or not the U.S. is in a recession, you’re asking the wrong question, according to a top Federal Reserve official.

“Whether we are technically in a recession or not doesn’t change my analysis,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, told CBS’ “Face the Nation” on Sunday. “I’m focused on the inflation data. I’m focused on the wage data. And so far, inflation continues to surprise us to the upside. Wages continue to grow.”

Last month, U.S. inflation jumped to a four-decade record high, rising 9.1% from a year ago. At the same time, the labor market remained strong: Nonfarm payrolls increased by 372,000 last month, alongside a low national unemployment rate of 3.6%.

Continue reading, here.

 

Business Insider/Zahra Tayeb
The dollar has slid to a one-month low now that the US has technically entered recession

The dollar tumbled to a one-month low against a basket of major currencies on Monday after data showed the US economy has entered a technical recession, prompting investors to think the Federal Reserve may be slower to raise interest rates.

The dollar index, which measures the greenback’s performance against six other currencies including the Japanese yen, slipped 0.52% to trade at $105.35 – its lowest since July 5.

The safe-haven currency has endured sharp sell-offs in recent weeks, only rising on two days since mid-July as a “sell-the-fact” reaction hits markets over expectations that the Fed will become less aggressive in its monetary policy after data showed US GDP contracted for two straight quarters – the technical definition of a recession.

Keep reading, here.

 

CNN Business/Allison Morrow
Why some people actually want a recession (and others say that’s crazy)

The US economy is on a knife’s edge, potentially already in a recession after a second quarter of shrinking activity. But indicators are mixed, fueling uncertainty about the way forward.

At the core of the debate among economists and policymakers is a fundamental question with massive implications for America’s future: Which is worse — inflation, or a recession?

No one seems to agree one way or another.

By aggressively raising interest rates, the Federal Reserve is making a big wager that recession is worth the risk if it takes the heat off of consumer prices, which are rising at their fastest pace in four decades.

But many economists and lawmakers are pushing back on that idea, arguing that the so-called cure of a recession would be far worse than the disease of inflation.

You can read the full article, here.

 

 

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