Just how much will the Fed have to raise rates this year? John Roberts, a former Fed board economist, lays out three different scenarios jrobertsmacroecon.wordpress.com
The first scenario is along the lines of the soft-landing story told by the December summary of economic projections. Importantly, underlying inflation is presumed to stay at 2%
In the second scenario, inflation stays high because longer-run inflation expectations grow unanchored. Moderately restrictive monetary policy sends the unemployment rate up by around a half percentage point, and inflation remains above 3%.
In the third scenario, the Fed really slams on the brakes. The fed-funds rate rises to almost 2.5% this year and 4.25% next year. The unemployment rate rises more than a half-point in 2023 and entails "a nontrivial risk of recession."
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