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Fed Needs to Hike to Slow Inflation Without Recession, Credit Suisse Strategist Says
The Federal Reserve needs to pursue a Volcker-style shock strategy to drive down asset prices if it wants to slow inflation without causing a recession, according to Credit Suisse Group AG strategist Zoltan Pozsar. The central bank needs to curb services inflation, which is driven up by higher housing costs and a reduced labor supply, Pozsar wrote in a note to clients. The key to turning those drivers around is to tighten financial conditions by increasing longer-term borrowing costs, the influential analyst said. “We need to slow services inflation by slowing, not killing, wage growth, by bringing about more ... (full story)