Aug 08, 2024 08:22 AM IST
US recession: JPMorgan now sees just a 30% chance of the Federal Reserve keeping interest rates “high-for-long”.
JPMorgan Chase now sees a 35% chance that the US economy will enter recession by the end of this year. This is up from 25% as of the start of last month. JPMorgan economists led by Bruce Kasman wrote in a note to clients that US news “hints at a sharper-than-expected weakening in labor demand and early signs of labor shedding.” The team kept the odds of a recession by the second half of 2025 at 45%.
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The note read, “This modest increase in our assessment of recession risk contrasts with a more substantial reassessment we are making to the interest rate outlook.”
Realization of a “US/global recession” would “almost certainly produce a sharp and immediate easing” by central banks, JPMorgan economists wrote.
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Will US Federal Reserve cut interest rates?
JPMorgan now sees just a 30% chance of the Federal Reserve keeping interest rates “high-for-long” compared with a 50-50 assessment two months back. JPMorgan said that as US inflation pressures are coming down, the Fed cutting rates by half a percentage point is possible in September and November.
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The bank’s new calculation for recession risks follows a similar step by Goldman Sachs Group which now sees a 25% probability of a recession in the next year.