Federal Reserve says US economy won’t enter into recession

As per the minutes of the Federal Reserve’s July monetary policy review meeting, the United States economy is unlikely to enter into a recession in 2023.

The Minutes of the Federal Reserve’s July 25-26 meeting showed, “The economic forecast prepared by the staff for the July FOMC meeting was stronger than the June projection. Since the emergence of stress in the banking sector in mid-March, indicators of spending and real activity had come in stronger than anticipated.”

It added, “However, the staff continued to expect that real GDP growth in 2024 and 2025 would run below their estimate of potential output growth, leading to a small increase in the unemployment rate relative to its current level.”

Earlier, global rating agencies had predicted a “mild recession” in the US economy.

In its July meeting, the United States central bank raised its benchmark interest rate by 25 basis points, the highest in the past 22 years at 5.25-5.5 per cent to tackle inflation and raise it back to its 2 per cent target.

The consumer price index (CPI) in the US, which is the measure of the prices of a basket of goods and services, increased by 3 per cent in June, decreased from a four-decade high of 9.1 per cent the same month last year.