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Janet Yellen, Elon Musk Warns Severe Recession, Will Crypto Crash Again?


Johnivan0

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Treasury Secretary Janet Yellen in an interview on January 27 said the risk of a recession still persists despite better inflation and jobs data, reported Bloomberg. She believes the Federal Reserve will continue raising interest rates and high interest rates increase recession fears.

 

U.S. Q4 GDP report also comes in at 2.9% against the expected 2.6% indicating a decline a recession fears and cooling inflation. However, consumer and business spending dropped in December due to higher interest rates that impact purchasing power.

 

She believes maintaining a strong labor market while bringing inflation down indicates a slowdown in economic growth.

 

Meanwhile, Elon Musk has continuously warned the Federal Reserve of the increasing risks of recession with its hawkish rate hike approach. The Fed announces a 50 bps rate hike in the last FOMC meeting, after four consecutive 75 bps rate hikes.

 

Musk plans to reduce costs on everything related to Tesla to deal with a recession despite a strong Q4 earnings report. He believes companies will continue to layoffs and cost-cutting due to high interest rates.

 

Moreover, JPMorgan CEO Jamie Dimon expects interest rates to go beyond 5% as inflation remains high. According to CME FedWatch Tool, the probability of a 25 bps rate hike is 98.4%.

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