the president s right. it s not inevitable. there s risk. whenever you go into a rate tightening cycle, like what we are in the middle of, especially if it happens quickly, you gotta be you gotta think there s some chance that you are going to lead to recession. we re trying to turn the hot and the cold to get the shower the right temperature. if you crank it all the way hot and then you try to crank it cold, you might get a little burned. is it more likely than not? how would you rate the likelihood? you know, i think the thing that we re not fully grasping or appreciating in this situation is that some significant component of how we got inflation came from supply shocks and supply disruptions. that gives you a recession and
it is kind of a repricing of stocks to re adjust and reflex this new landscape. higher economic growth, high interest rates and higher inflation. claire, what are you seeing from your vantage point in london? yeah, good morning, alex. this is a similar story in many the u.s. we have the likes of the bank of england coming this week and the bank of japan. the bank of england are looking at inflation and how do they adjust policy when it is driven by not an excess of demand but by the supply shocks. the war in ukraine driving up energy and food prices. how do they tackle that in a way that doesn t tip the economy into a recession? over in asia, we had also a mixed picture there. japan was lower because that s the outlier globally. the bank of japan meeting this week. they are actually trying to keep inflation. that country hasn t seen inflation in fact, they ve
i don t anticipate that inflation is going to be a problem, but it is something that we re watching very carefully. in june she called inflation transitory and said it might level out at 3%. it is now 8.3%. but to be fair, just about everybody got it wrong here. the fed chief was saying it would be transitory, we thought the supply shocks would start to work themselves out and they haven t. talk to us about the new urgency of the white house trying to show that it is on this message, yeah, we got it wrong but we re on the case now. well, just to your point, think about the context here. we ve had a couple of decades where inflation remained very low. so that was not a top of mind problem going into the pandemic crisis. what was top of mind was the fact that in the recovery from the great recession and the financial crisis, many
and solutions, let s talk about how we got here. there were various times during 2021 that president biden and treasury secretary janet yellen and the head of the fed jerome powell down played inflation. let me give you one example from jerome powell. i really do not expect that we ll be in a situation where inflation rises to troubling levels. okay. so that was wrong. that was february of 2021. did they miss warning signs? well, it s easy to say in hindsight, alisyn, that they missed warning signs, but i think the consensus among economists, people who were analyzing the economy was that actually the inflation we saw back then, three, four, five months ago, was mostly pent up demand from, you know, years of pandemic combined with supply shocks. i mean, all around the world. those are still big, big issues, and there s a good reason and
covid experience being mostly over, the pandemic mostly over, we hope. and that unleashing that great deal of pent-up demand and also a lot of supply shocks, hard to get the entire global economy running again. then on top of that you ve got ukraine and on top of that you ve got china shutting down, closing down, there are a lot of things going on, but the biggest worry and the worry i have is the fed may be overreacting and raising interest rates may have nothing to do with all of the above. hmm. when you look at all of this, how much of it relates to a global pandemic the likes of which the modern economy hasn t seen? the economy looks very different now than it did with the influenza 100 years ago. and how much of it relates to other factorsing us a mentioned in the clip we ve shown, which