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Inflation remains too high for the Fed to bring down without causing a recession, Strategas CEO says

Inflation remains too high for the Fed to bring down without causing a recession, Strategas CEO says

According to Strategas CEO Jason Trennert, the Federal Reserve will struggle to avoid a recession while raising benchmark rates to fight inflation.

Speak with CNBC on Mondayhe said inflation was too high for a soft landing to be realistic. The central bank will announce its next rate hike decision after its monetary policy meeting this Wednesday.

“There have been very few times when inflation has gotten to something like 8 or 9% where the Fed has been able to bring it down without causing a recession,” Trennert said.

He added that comparing the current environment to 1994, when the Fed was stuck in a soft landing in the middle of a tightening cycle, is not accurate because inflation was only about 3%.

“It seems to me that the operating assumption should be that you’re probably going to get into a recession in 2023,” Trennert said. A typical recession means a 30% drop in earnings, which is “not a particularly great development for stocks,” he added.


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