JPMorgan sees a “soft” recession in the USA in 2023 due to rates increased by FRS

According to economists’ forecasts, the USA will face a “soft” recession and increased interest rates. It can put more than a million people out of work. As for the FRS, in 2024, it will have to pay attention to lowering borrowing costs.

This month Bloomberg asked several economists, and they said there was a 65% chance of a recession in the US next year. At the same time, in 2023, the FRS rate will reach a high of 5%, and by the end of 2024, it will decrease to 3%.

Economists Michael Feroli and Daniel Silver declared that in December, the Feds will probably have to increase the base rate by 50 points. In 2023, it will be necessary to raise the rate by 25 points at each of the first two meetings. These actions are necessary to reach the target range of 4.75 - 5% before stopping. 

Analysts suppose that inflation will be slow enough for the central bank to reduce rates by 50 points per quarter starting in the second quarter of 2024. By the end of the year, it is necessary to reach 3.5%.

However, Feroli and Silver said that a more severe downturn could prompt the central bank to further cut borrowing costs.