The Federal Reserve Is Veering Toward a Hard Landing
The recent disruption in financial markets may be just getting started, inflicting damage on the broader economy.
The Fed may not be able to avoid a hard landing.
Photographer: Sean M. Haffey/Getty Images
Higher risk assets are sending a concerning message to the Federal Reserve: the central bank either needs to move more quickly and aggressively to tighten monetary policy, or the fallout from impending interest-rate increases will get even worse. As troubling as that sounds, consider that either way it’s looking less likely that the world’s most important central bank will be able to keep the economy from a dreaded hard landing.
Rates traders have now priced in six rate hikes from the Fed before year-end. U.S. stocks have had a bumpy ride, with the once highflying Nasdaq Composite Index down 15.6% from its high in November. Such well-known companies as Netflix Inc., Meta Platforms Inc. and Zoom Video Communications Inc. have fallen even harder, dropping some 40% or more over the past three months.