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Report: Fed to launch fastest rate hikes in 3 decades in desperate attempt to stave off recession

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Yasin Ozturk/Anadolu Agency via Getty Images

With concerns growing over an "inevitable" recession due later this year, the Federal Reserve plans to raise interest rates at its fastest clip in three decades, the Associated Press reported on Monday.

The maneuver, which will make it costlier to borrow everything, from a line of credit to a mortgage on a home, will also further strain Americans' pocketbooks and likely weaken the economy. But it is considered the only way to potentially stave off the even harsher economic consequences of a wider recession.

Economists predict the first rate hike will hit Wednesday, following a rate-setting meeting where the central bank is expected to announce that it's raising its benchmark short-term interest rate by a half-percent — the sharpest rate hike since 2000.

But according to the AP, the rate hikes won’t stop there. Rather, they will continue at a “drastic” pace over the next several months.

“The Fed will likely carry out another half-point rate hike at its next meeting in June and possibly at the next one after that, in July,” the news agency said, adding, “Economists foresee still further rate hikes in the months to follow.”

The news is the latest development in an ill-fated inflation saga that began in the early days of Joe Biden’s presidency.

For months, the president and his Federal Reserve officials assuaged fears over soaring inflation by claiming the crisis was only “transitory” and failing to take steps to reverse the trend. But the crisis persisted. In March, the consumer price index rose at its fastest pace in 40 years, and there is no end in sight, as demand continues to outstrip supply.

"This was not transitory, this was a real, serious case of inflation," Home Depot founder Ken Langone charged in an interview with Fox Business in April. "We lost a whole year on addressing the issue. Only because, frankly, we have leadership today in America that isn't willing to admit when they're wrong. They made a terrible blunder here, and now the price has got to be paid."

That price, Langone noted, would be jacked-up interest rates at the same levels as inflation or higher — meaning above 8.5% — as the only potential way to achieve a “soft landing.”

It seems the Fed now agrees with Langone’s assessment. Though even with an interest rate hike plan, many fear a recession is still unavoidable.

“A recession at this stage is almost inevitable,” former Fed vice chair Roger Ferguson told CNBC on Monday. “It’s a witch’s brew, and the probability of a recession I think is unfortunately very, very high because their tool is crude and all they can control is aggregate demand.”

Ferguson is only the latest to sign on to that line of thinking.

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