Economics professor Kenneth Rogoff of Harvard University warned on Friday that it would be really hard to get the inflation rate down without a recession.
Rogoff told the Cavuto: Coast to Coast that if the Fed raise interest rates that much, it will cause a recession. They raise interest rates to 3 -- 3.5, and we're left with a very soft economy and still inflation. Rogoff's comments came on the heels of Senate confirmation of Jerome Powell for a second Federal Reserve Chair term, as policymakers try to handle record-high inflation.
He stressed that once inflation gets out of hand, it won't be easy to bring it back under control. The Harvard economist noted that multiple tumultuous events are impacting the U.S. economy, in addition to the fact that the Fed let inflation get out of hand. The shutdowns in China, and their COVID policy, are a political problem. It's hard to overstate how bad that is, because they slow growth, according to Rogoff.
It's a supply shock that keeps coming, that raises prices, lowers productivity. The war in Ukraine is part of the push up of gas prices, it's pushing up food prices. He said there was not much good news on bringing things back in line. The stock market is sort of absorbing all of it. He concluded that tech stocks are particularly sensitive to the interest rate.
Tech stocks are looking to have big profits for a long time in the future, and they've been coming down harder.