Deutsche Bank predicts US recession in 2023 due to Fed rate hikes

recession is on the horizon in the U.S. as the Federal Reserve makes an aggressive pivot to cool the hottest inflation in four decades, according to economists at Deutsche Bank. "We no longer see the Fed achieving a soft landing," Deutsche Bank economists led by Matthew Luzzetti said in the analyst note. "Instead, we anticipate that a more aggressive tightening of monetary policy will push the economy into a recession."FED RAISES INTEREST RATES FOR FIRST TIME IN 3 YEARS, PROJECTS 6 MORE HIKES AS INFLATION SURGESThe analysis comes as the Fed takes a more hawkish approach to fight inflation, which is at the highest level since 1982.

Policymakers raised rates by a quarter-percentage point in March, and have since signaled support for a faster, half-percentage point increase at their May meeting.

FILE - Federal Reserve Chairman Jerome Powell testifies during the Senate Banking Committee hearing. (Tom Williams/CQ-Roll Call, Inc via Getty Images)Traders are now pricing in more than an 80% chance of a hefty half-point rate jump when policymakers meet next month"If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so," Chairman Jerome Powell said recently. "And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well." Some economists believe the Fed waited too long to confront the burst in inflation, while others have expressed concerns that moving too quickly to stabilize prices risks triggering an economic recession.