Part 5/11:
The potential recession is framed not as an immediate event, but as an inevitable consequence of the current policy trajectory. The bank notes that ongoing rate increases, coupled with tightening liquidity in the economy, significantly raise the risk of downturn.
Tightening Liquidity: As banks become more cautious and implement stricter lending standards, less money circulates through the economy. Reduced credit availability results in diminished consumer spending and business investment, both of which are vital for economic growth.