Financial markets are embroiled in a kind of tug of war amid rising uncertainty over the effect of the interest rate hikes by the US Federal Reserve and other central banks and how long they will continue in the face of growing signs of a recession.
Trader on the floor of the New York Stock Exchange (AP Photo/Richard Drew)
One view is that the inflationary surge, which has already seen the fastest increase in prices for four decades—8.6 percent in the US and heading towards double digits in the UK and the euro zone—will continue and lead to further significant interest rate increases as central banks seek to suppress wage demands.
The other is that the interest rate rises so far have brought about a slowdown in the economy and even set in motion a recession and the Fed and other central banks will not lift rates as much as previously thought.
This appears to be the prevailing sentiment on Wall Street at the present with the major…
