Markets continue to focus on the US Federal Reserve’s interest rate decision due next week. Market expectations for a recession next year rose to 40 percent, the poll showed, though most economists expect the Fed to keep raising rates by 3 yards (75 basis points) rather than 4 yards.
The U.S. consumer price index (CPI) rose to 9.1% in June, a new 40-year high, sparking speculation that the Fed will take more aggressive measures and may raise interest rates by 4 yards at this month’s meeting to combat soaring inflation .
However, several hawkish officials have publicly expressed support for a rate hike of 3 yards, because too fast rate hikes may lead to unnecessary weakness in the economy, easing the fear of a 4-yard rate hike.
A Reuters poll conducted July 14-20 found that 98 of 102 economists expected the Fed to raise interest rates three yards at its July meeting, bringing the rate range to 2.25% to 2.50%. In addition, only 4 expected to raise interest rates by 4 yards.
In addition, most economists expect the Fed to slow the pace of rate hikes to two yards in September, followed by just one rate hike at the November and December meetings.
In addition, the survey results also showed that economists surveyed on average expected a 40% chance of a recession in the next year and a 50% chance of a recession in the next two years, up from 25% in the June survey. and 40%.
Citigroup’s chief global economist Nathan Sheets also previously estimated a 50% chance of a recession. The perfect storm of Fed rate hikes and high inflation is increasingly weighing on consumer spending and economic output, Schitz said.
Goldman Sachs CEO David Solomon also previously expected a 50% chance of a recession in the U.S. within two years, and a 30% chance of a recession in the next 12 months.