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Experts do not expect the Fed to cut rates in 2023, increasing risk of default

Markets are pricing in a 50 basis point cut in Fed rates by the end of the year Based on expectations that the U.S. economy will plunge into recession Several local banks went bankrupt this year. But the latest Reuters poll of economists said: A majority do not believe the Fed will cut rates before the end of 2023.

Their opinion is based on Unemployment remains low and inflation is still more than double the US Central Bank’s 2% target. “In our view, the Fed will view inflation as an acceptable price to get back on target, rather than relying on a mild recession,” said Michael Gapen, chief U.S. economist at Bank of America. said.

A small majority of respondents to the latest survey, 22 out of 41, also said: The recent brinkmanship of raising the debt ceiling has increased the risk of the U.S. defaulting on its debt. Lawmakers are less than two weeks away from Secretary Janet Yellen’s X-date, said to be June 1, when the Treasury Department will run out of money to pay federal bills.

“No matter how you cut it, The United States faces difficult choices to get its finances in order.” Michael Gregory, deputy chief economist at BMO Capital Markets, said: But further political brinkmanship or, worse, failure to raise the debt ceiling, It’s like rubbing salt on a wound. “

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