Dusseldorf In March, the US inflation rate rose to its highest level since December 1981 – namely by 8.5 percent compared to the same month last year. And even if some economists like Bernd Weidensteiner from Commerzbank see a chance that inflation has thus peaked, it is likely to remain at an exceptionally high level for some time to come.
This in turn could trigger a so-called wage-price spiral, in which wage and price increases reinforce each other. So the pressure on the US Federal Reserve to get inflation under control and tighten monetary policy remains high. A turn in monetary policy that is too quick and too severe could, however, trigger a recession.
It will be extremely difficult for the monetary authorities to escape this dilemma and find a middle ground. Several interest rate hikes of up to 0.5 percentage points are already expected on the financial markets for the next Fed meetings in early May and mid-June.
Is the US Economy Plunging into a Recession? And how might that play out on Wall Street? Stock market expert Markus Koch classifies the situation in the new episode of “Handelsblatt Today” and reports how Wall Street reacted to the latest inflation figures.
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