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Will fighting inflation leave the U.S., South Korea in recession? Analysts explain Updated: 2022-07-28 05:31:58 KST

It's time for global insight where we speak to experts from around the world on issues making headlines. On Wednesday, the U.S. Federal Reserve raised its benchmark interest rate by an additional three-quarters of a percentage point. This is the fourth time the central bank has raised rates this year, amid record high inflation of 9.1 percent in June the highest in four decades.
With monetary tightening at a much faster pace than previously expected, various indicators such as property sales and a falling stock market are leading to hope that aggressive tightening has been slowing the economy down. But has it been working all too well to the point of a recession?
And what about the South Korean economy which has also been experiencing surging price levels and rate hikes?
We invite Randal Kroszner, Professor of Economics, University of Chicago Booth School of Business, and KIM Sei-wan, Professor of Economics, Ewha Womans University.

1. Prof. Kroszner: It seems the bank is trying to dampen demand as the supply side factors such as the supply chain and the war in Ukraine seem to be beyond the Fed's control. Has the aggressive pace of rate hikes been working, and do you agree with its latest decision (to raise or not raise rates)?


2. Prof. Kim: Janet Yellen said the U.S. economy is "in a period of transition in which growth is slowing" but not in a recession. What's your point of view? At what point would you call it a recession?


3. Prof. Kroszner: A report from Bank of America says the U.S. will have a "mild recession" in the second half of 2022. Some are warning there will be a double-dip recession. What is your outlook?


4. Professor Kim: Is South Korea also in danger of slipping into a recession? What concerns should we have?


5. Prof. Kroszner: Some believe a mild and short-lived recession may do the U.S. economy good. But the cut in figures also impacts people's jobs and livelihoods. Will the pain really lead to gain for the U.S. economy? If a recession does occur, how big would the fallout be, and how do you get out of a recession?


6. Professor Kim: Fed Chair Jerome Powell hinted there could be a "softish landing" for the U.S. economy amid a series of rate increases. What would be a soft landing, and what does he mean by "softish"?


7. Prof. Kroszner: What do you think the Fed's next steps will be? Do you think they will start to slow their pace a little bit?


8. Professor Kim: Consumer sentiment is down in South Korea as many expect the economy to get worse. How should the BOK and the government prepare for a soft landing for the Korean economy amid continued monetary tightening and slower export growth?

Randal Kroszner, Professor of Economics, University of Chicago Booth School of Business, and KIM Sei-wan, Professor of Economics, Ewha Womans University.
Thank you for your time.
Reporter : osy@arirang.com
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