Hope for soft landing despite Federal Reserve raising interest rates
There has been much talk about the US entering a recession but the economy has yet to experience a major slowdown. There are fears though that the aggressive rate hikes by the Federal Reserve could tip the scales with St Louis Fed President James Bullard calling on his colleagues to raise rates to a minimum of 5% to 5.25%.
With data showing that inflation is slowing there had been hope that the Fed would ease up on future rate hikes which sent markets higher last week. But Bullard’s comments dampened their enthusiasm.
Even so though, a report from Goldman Sachs is predicting that the US will narrowly avoid a recession in 2023. While there will be a slowdown in labor demand, they expect that the slack will come from the large numbers of vacancies reducing and not from rising unemployment. At a labor conference the new Boston Fed President Susan Collins concurred with that assessment.
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