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U.S. heading into shallow recession, no respite from rate hikes yet: Reuters poll

Mount Equity Group Tokyo Japan > News > Markets > U.S. heading into shallow recession, no respite from rate hikes yet: Reuters poll

BENGALURU, Dec 9 (Reuters) – The U.S. economy is heading into a short and shallow recession over the coming year, according to economists polled by Reuters who unanimously expected the U.S. Federal Reserve to go for a smaller 50 basis point interest rate hike on Dec. 14.

The Fed has another half-point at least to go with rates early in the new year with inflation still running well above the Fed’s 2% target even though economists put a steady 60% probability on a recession taking place in 2023.

After raising the federal funds rate 75 basis points at each of the previous four meetings, all 84 economists polled Dec. 2-8 expected the central bank to go for a slightly softer half a percentage point to 4.25%-4.50% this time.

While the central bank is attempting only to deliver some pain and not a full-fledged downturn, economists, who tend to be slow as a group in forecasting recessions, raised the probability of one in two years to 70%…

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