Will tighter monetary policy cause the next big downturn?

We expect the Fed’s monetary policy tightening cycle, which is now well underway, to contribute to a slowdown in the US economy during 2019-2020. And tighter monetary policy may also trigger downturns in countries with high household debt burdens and in euro-zone economies with high public debt ratios. We don’t think that higher interest rates alone will cause a major global downturn in the coming year or two, but they may do so in combination with some other factors.