The jury is out on whether the U.S. economy will be able to avoid a hard landing. We believe the probability of a recession has risen considerably, reflecting concerns over the threat of policy overtightening by the U.S. Federal Reserve. As shown in exhibit 1, the Fed funds future curve is projected to exceed the estimated neutral rate by a significant margin. When considering the Fed’s dual mandate, Chairman Jerome Powell has made it clear that he is far more focused on containing inflation than…
