Mubasher: The minutes of the Federal Reserve meeting showed that the repercussions of the US banking crisis are likely to push the economy towards recession during the current year.
The minutes of last March’s meeting included discussions among Fed members regarding the potential repercussions of the collapse of Silicon Valley Bank and the subsequent turmoil in the financial sector that began in early March.
And the minutes stated: “Given their assessment of the potential economic effects of the recent developments in the banking sector, the expectations of the Fed officials at last month’s meeting included a moderate recession beginning later this year, with a recovery during the following two years.”
Projections that followed the meeting indicated that Federal Reserve officials expect US GDP to grow by only 0.4 percent for 2023.
The previous Fed meeting resulted in an interest rate increase of 0.25 basis points, which is the ninth consecutive increase to reach the range between 4.75 percent and 5 percent; This is the highest level of interest since late 2007
The minutes of the meeting stated: “Reflecting the effects of tightening on the labor market and production, core inflation was expected to slow sharply next year.”
“Even with the actions that have been taken, members have recognized that there is a great deal of uncertainty regarding how these conditions will evolve,” he added.
