The US has a 40% chance of entering a recession next year: BofA


The economists of BofA Securities come about a 40% chance of recession in the United States next year, with inflation remaining high.

US GDP growth is expected to slow to near zero in the second half of next year “as the lagged impact of tightening financial conditions cools the economy,” with a “modest” rebound in 2024, according to the report released on Friday. .

“Our worst fears around the Fed have been confirmed: they fell far behind and are now playing a dangerous game of catch-up,” wrote Ethan Harris, global economist at BofA, adding that the firm expects the Fed to raise rates. interest above 4 percent.

They consider that the risk of recession for this year is low.

The Fed on Wednesday approved the biggest interest rate hike in more than a quarter century to curb rising inflation. The move raised the target federal funds rate by three-quarters of a percentage point to a range of 1.5% to 1.75%.

In addition, economists at BofA Global lowered their forecasts for global growth, citing inflation, the war in Ukraine and lockdowns related to the virus. Covid-19 in China.

They now expect global economic growth of 3.2 percent.

The rise in energy prices in the framework of the war between russia and ukraine “It has already fueled inflation around the world, which in turn has forced central banks to adopt a more aggressive stance,” the economists wrote.

erp



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