(MENAFN) According to S&P Global Ratings on Monday, the Federal Reserve’s monetary tightening, rising unemployment risks and fears of recession have led to a reduction in the growth forecast for the US economy for 2023 from 2% to 1, 6%.
In a report, the international rating agency said “the Fed will maintain tight monetary policy until inflation decelerates and moves closer to its target in the second quarter of 2024.”
The organization predicted that by the middle of next year, the federal funds rate would be between 3.5% and 3.75%. He also issued a stern warning about the possibility of an international recession, adding that “the chances of a contraction are increasing”.
He also mentioned that “we assess the risk of recession at 40%, reflecting a larger rise in prices with even more aggressive Fed policy as we approach 2023” as well as “as inflation expectations become more entrenched, extreme price pressures will likely last well into 2023.”
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