Richard Clarida is a former Vice Chairman of the Board of Governors of the U.S. Federal Reserve System

  • from September 2018 to January 2022

He's now a Pacific Investment Management Co. (PIMCO) managing director and global economic advisor.

He has written a piece with the title above in the post, arguing (in brief):

  • Bond markets are pricing in additional Federal Reserve interest rate hikes, acknowledging the central bank’s emphatic resolve to tame inflation despite the likely trade-offs.

Calrida highlights the recent:

  • blockbuster U.S. employment report for January
  • higher-than-expected data on U.S. Consumer Price Index (CPI) inflation
  • stronger-than-expected data on retail sales
  • additional remarks from Fed officials

which:

  • together triggered markets to price in not only the two additional rate hikes indicated by the Fed’s December 2022 dot plot (part of its Summary of Economic Projections), but also a material likelihood of at least one additional hike after that, which would bring the top of the range for the federal funds rate to 5.5%.

And says:

  • At PIMCO, our base case includes a recession, but all recessions are not created equal. We see no reason to believe that the growth slowdown the Fed is engineering need result in a deep and prolonged recession.

Here is the link for more if you are interested

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