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MNI INTERVIEW: Fed Could Revise Down Rate Peak-S&P's Gruenwald

(MNI) Washington
WASHINGTON (MNI)

S&P Global Chief Economist says balance of risks is clearly on the downside with recession probabilities rising, especially in the U.S.

Aggressive Federal Reserve policy spurred by ongoing price spikes will usher in low economic growth this year and perhaps a recession next year, which could push the central bank to reconsider guidance suggesting it will push rates further toward 4% in 2023, Global Chief Economist at S&P Global Ratings Paul Gruenwald told MNI.

In the Fed's projections released in June, the median central bank official penciled in a 3.4% fed funds rate by year-end and a terminal rate of 3.8% in 2023. Yet 2023 is when many economists, including Gruenwald, believe the economy might slip into recession as unemployment ticks up and consumer spending ebbs.

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Aggressive Federal Reserve policy spurred by ongoing price spikes will usher in low economic growth this year and perhaps a recession next year, which could push the central bank to reconsider guidance suggesting it will push rates further toward 4% in 2023, Global Chief Economist at S&P Global Ratings Paul Gruenwald told MNI.

In the Fed's projections released in June, the median central bank official penciled in a 3.4% fed funds rate by year-end and a terminal rate of 3.8% in 2023. Yet 2023 is when many economists, including Gruenwald, believe the economy might slip into recession as unemployment ticks up and consumer spending ebbs.

Keep reading...Show less