Ex-Federal Reserve Governor Warns Inflation Will Continue to Rise, ‘Very Close’ to Recession

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Joshua Caplan

Appearing Thursday on CNBC, former Federal Reserve governor Robert Heller warned that inflation will continue to rise in the United States.

A transcript is as follows:

CNBC HOST: In your view sir, do you think this 75 basis point hike is going to go far enough?

ROBERT HELLER: Absolutely not. Inflation will continue to rise and the Fed is way behind the curve. If you look at the current Fed funds rate in real terms, it’s still stimulative. It has a negative real rate, so we are still pushing inflation higher than it was before.

HOST: Let’s talk about the guidance that the Fed has offered. 50 or 75 basis points again in July. How soon before we see clear evidence that inflation is starting to abate in the United States, and is it going to take a recession to get there? That’s the big fear in the markets right now.

HELLER: We are very close to a recession as it is right now. In the first quarter of this year, we already had a slight downturn in GDP. If you look GDP data from the Atlanta Federal Reserve Bank, they are forecast zero GDP for the second quarter. You have one quarter of negative growth and of no growth. A recession typically is defined as two quarters of negative growth. We are perilously close to that.

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