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US inflation ‘will cause recession'
The Federal Reserve needs to take action to halt rising inflation, argues one expert...
Brian Bethune, director of financial economics at Global Insight Inc, explained: “Inflation, combined with falling home values and mounting job losses, is leading to cutbacks in consumer spending that may push the economy into a deeper recession.
“Federal Reserve policy makers need to lower the benchmark interest rate again this month as reviving growth remains should be their highest priority. Their primary focus has to be on the downside risk to growth. There is very little ability for companies to pass on price increases."
The Commerce Department reported separately that housing starts in the U.S. dropped twice as much as forecast in March to a 17-year low. Work began on 947,000 homes at an annual rate, down 11.9% from February and the fewest since March 1991.
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