Measures to curb inflation of U.S. Federal Reserve (Fed) will likely trigger a recession in the world’s largest economy in the last quarter of 2023 and the first quarter of 2024. This is the latest warning issued by Deutsche Bank, through which reflects growing concern about the monetary tightening move from the Fed.
The pressure of the record high consumer price index is forcing the Fed to raise interest rates “fast and strongly” to bring inflation under control. Even, the Fed needs to “rapidly” reduce the size of the current $8.9 trillion balance sheet.
Deutsche Bank experts said that the above decisions of the Fed will affect aggregate demand, slowing down the economy US economy. However, the bank forecasts a “mild” US recession, with unemployment peaking above 5% in 2024.
Similarly, Goldman Sachs said the probability of a US recession has increased to 35% in the next 12 months.
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