A tricky balancing act is underway by the Federal Reserve to curb inflation without causing a recession. There is speculation that rates could go up another 1% at their meeting on Tuesday.
University of Nebraska – Lincoln Economics Professor Eric Thompson tells KLIN News, “Anytime the Federal Reserve Bank is raising interest rates, especially in periods like this when they need to raise them quickly creates an elevated risk of recession. That is something of concern right now.”
Thompson says with inflation so high, the Federal Reserve Bank has been raising rates in an effort to moderate or slow economic growth as part of an effort to reduce inflation. He says sometimes when they raise interest rates they are able to slow economic growth without the economy falling into a recession. That is called a soft landing. Sometimes you do see a recession so what we don’t know is which direction it will go – a recession or slower economic growth.
That thought can be scary but Thompson says there are still economic opportunities. He says, “There is still a favorable job market. There might be opportunities to move up either within your own company or other business right now because of the strong labor market that is continuing.”
Thompson says the potential outcome is uncertain and he encourages families to save emergency money now.