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The Federal Reserve should halt its interest rate hiking campaign because the U.S. economy is already poised for a recession, said economist Ed Hyman, chairman of Evercore ISI. Hyman said on CNBC’s “Squawk on the Street” that he was in the “recession camp,” but did not expect a sharp downturn. Hyman, who has been ranked the No. 1 Wall Street economist for more than four decades by Institutional Investor, said the central bank may not need to cut interest rates just yet, but should at least not implement another rate hike at the next meeting in early May. “Words are important,” Hyman said. “Soft landing? I don’t think so. Hard landing? Probably. Severe recession? No, I don’t think so.” “You need to take a step at a time,” he added. “I feel confident that the Fed should pause and then see what happens.” Hyman specifically pointed to an inverted yield curve and contracting money supply as signs that a recession is likely on the horizon. He added that a recession, if one does take place, would be one of the most anticipated ones in history. His comments come on the heels of the March consumer price index reading , which showed the price of goods and services rose 0.1%, less than economists forecast. Compared to March 2022, the basket was up 5%, also less than economists expected. That 5% annual advance marked the slowest year-over-year increase in inflation since June 2021. Excluding food and energy, the so-called “core” CPI increased 0.4% from a month ago, putting it 5.6% higher than the same month last year. Despite both figures showing the widely followed gauge of inflation remained above the Fed’s 2% inflation goal, Hyman said the data was just one of multiple indicators showing price increases are slowing down. The central bank implemented a quarter-percentage point rate hike at its March meeting, marking its ninth straight rate increase . “They’ve already made a mistake,” Hyman said of the Fed. “They tightened too much.” A pause at the next meeting would allow policymakers to more fully see how strongly previous increases have cooled the economy, he said. Hyman thinks the Fed was wrong to believe inflation was at first transitory and now believes it moved too far after getting a delayed start on rate hikes. “It takes a long time for rates to work,” he said. “To turn a tanker takes 10 miles.” As for the future of the economy, Hyman said he’s “seen enough” to make his prediction for a recession: “I know where this boat is going.”
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