CNBC Poll: Fed’s Battle with Inflation will Trigger a Recession

The Federal Reserve’s battle against inflation is likely to end in a recession, according to a majority of economists, fund managers, and strategists polled by CNBC.

The survey found that 57 percent of respondents expect that a recession will result from the Fed’s interest rate hikes over the coming year. Thirty-three percent said they expect a recession will be avoided. Ten percent said they were unsure of what will happen.

The Fed’s monetary policy panel, the Federal Open Market Committee, is meeting on Tuesday and Wednesday to assess economic developments and adjust monetary policy. The Fed is widely expected to announce that it is raising its interest rate target by fifty basis points. It may signal that similar-sized hikes will follow at subsequent meetings.

The economists surveyed by CNBC expect two 50-point hikes in May and June, followed by a series of 25 basis point hikes. The fed funds futures market currently implies at least one more 50 basis point hike

The CNBC survey’s respondents see the Fed’s target hitting 2.25 percent by year-end and culminating in a 3.08 percent rate by August 2023. The futures market implies a target of three to 3.25 by year-end and rates at 3.5 percent or above by the summer 0f 2023.

The recession is not expected to start until the second half of 2023. Over the next 12 months, there’s only a 35 percent chance of a recession, according to the survey. That is up two percentage points since the prior survey. The odds of recession in Europe over the next 12 months also rose two points to 53 percent.