SK Coaching Stefan Kühn
29.12.2023 - 11:59:23Stefan Kühn: Interest rate hikes and recession - Strategic pauses and the challenge of monetary policy equilibrium
| Issuer: SK Coaching Stefan Kühn / Key word(s): Strategic Company Decision/Financing 29.12.2023 / 11:59 CET/CEST The issuer is solely responsible for the content of this announcement. Stefan Kühn, Ökonom In a changing fiscal environment where central banks around the world have reached a critical turning point, experts are discussing the potential impact of an overly expansionary monetary policy on the economy. Stefan Kühn, business consultant and economist, offers a deeper insight into this challenging phase and emphasises the need to proceed with caution. Interest rate hikes and recession: the risk of monetary policy overshooting The current cycle of interest rate hikes by central banks around the world may have reached its peak. This has led to a critical phase in which central banks are rethinking their strategies and pausing to assess the impact of their monetary policy decisions. The question of recession risk in this scenario is becoming increasingly important. Empirical evidence on the time lag between interest rate hikes and recessions Stefan Kühn points to the results of empirical studies which show that recessions typically only occur around 12 months after the end of an interest rate hike cycle. This delay between the monetary policy measures and the actual economic downturn makes it clear that the influence of monetary policy does not have an immediate and direct effect on economic activity. The challenge of the monetary policy slowdown An excessive rise in interest rates could slow economic growth and possibly exacerbate a recession. The art of monetary policy is to find the right balance to keep inflation under control while supporting adequate economic growth. In this phase, the risk of monetary policy "overkill" is particularly high. The importance of a cautious strategy In view of these dynamics, a cautious and prudent approach by central banks is required. The pause in the rate hike cycle allows monetary policy makers to assess the economic impact and react flexibly to developments. Avoiding an overly restrictive monetary policy could help to ensure a healthy balance between price stability and economic growth. Conclusion Stefan Kühn, emphasises that we are in a critical phase for monetary policy makers. The scenario of a possible overshooting of monetary policy requires a prudent approach. A smart and flexible strategy by central banks is crucial to support economic activity while minimising the risk of excessive dampening. The coming months of the new year 2024 will show how effectively central banks use their monetary policy instruments and what impact they have on the economy. A balanced and flexible monetary policy could help to improve the chances of sustainable economic stability. Stefan Kühn is an economist and has been studying macroeconomic change and the interdependence of markets and political influences on companies, society and financial markets for several years. He argues that macroeconomic Keynesian and new Keynesian models generally depict completely interdependent economic systems that cannot be solved recursively, but only simultaneously. He does not limit himself to purely scientific methods but draws his insights from his many years as an entrepreneur and consultant to the management of predominantly listed companies. Dissemination of a Corporate News, transmitted by EQS News - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The EQS Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.eqs-news.com |
