Investment bank MBS Capital Services has warned that the US economy will be in recession by the end of the year. The firm’s strategist expects the Federal Reserve to raise interest rates by an additional 25 basis points, warning that central bank monetary tightening will “affect the economy.”
Strategic recession and higher price expectations
Luca Mannucci, head of market strategy at MPS Capital Services, warned that the US will be dragged into recession by the end of the year and that the US dollar will fall by up to 5% against other currencies in the second half of this year, Bloomberg reports. reported on Thursday.
MPS Capital Services is an Italian corporate and investment bank, part of the banking group that includes Banca Monte dei Paschi di Siena SpA. The strategist was quoted as saying:
We expect a recession in the US by the end of the year… Tightening monetary policy will affect the economy.
Manucci expects the Fed to raise interest rates by an additional 25 basis points, while the European Central Bank (ECB) is expected to raise interest rates by at least two quarter points.
The platform predicted that the value of the US dollar would decline by about 3% against the euro in the coming months due to the Federal Reserve raising interest rates, according to the news outlet, noting that the Bloomberg Spot Dollar Index has already fallen by 1.6% this year, and it has already fallen by 1.6%. this year. It is down nearly 10% from its September high.
The MPS strategist also warned that the failure of several regional US banks, along with the problems Credit Suisse is facing, could lead to a tightening of credit conditions and hurt the economy.
Many people predicted a recession in the United States. Minneapolis Federal Reserve Bank President Neel Kashkari says the current banking crisis has pushed the US economy into recession. Economist David Rosenberg warned of an imminent “flash landing” and recession for the US economy. Gold expert Peter Schiff has warned that the US will face a financial crisis and a “much more severe recession” than the Fed realizes. Meanwhile, billionaire “bond king” Jeffrey Gundlach predicts “painful results” in the next recession.
What do you think of the predictions of the MPS strategist? Let us know in the comments section below.
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