Investment bank MPS Capital Services has warned that the US economy will be in recession by the end of the year. The firm’s strategist predicts the Federal Reserve will raise interest rates by an additional 25 basis points, warning that the central bank’s monetary tightening “will drag down the economy.”
Strategist’s Recession and Rate Hike Predictions
Luca Mannucci, head of market strategy at MPS Capital Services, has warned that the US will be dragged into a recession by the end of the year and that the US dollar will plunge as much as 5% against other currencies in the second half of this year. year, Bloomberg reported 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 the US recession by the end of the year… The tightening of monetary policy will drag down the economy.
Mannucci predicts that the Federal Reserve will raise interest rates by an additional 25 basis points, while the European Central Bank (ECB) is expected to raise rates by at least two quarter points.
It expects the US dollar to depreciate around 3% against the euro in the coming months due to interest rate hikes by the Federal Reserve, the news outlet reported, noting that the Bloomberg Dollar Spot Index has already fallen a 1.6% this year, and is down about 10% from the all-time high in September.
The MPS strategist further warned that the failure of several regional US banks, coupled with the problems facing Credit Suisse, could result in tighter credit conditions and hurt the economy.
Many people have predicted a recession in the US Federal Reserve Bank of Minneapolis President Neel Kashkari says the ongoing banking crisis has pushed the US economy closer to recession. Economist David Rosenberg warned of a “hard landing” and impending recession for the US economy. Gold lover Peter Schiff has warned that the United States will face a financial crisis and a “much more severe recession” than the Fed acknowledges. Meanwhile, billionaire “bond king” Jeffrey Gundlach foresees “painful results” in the next recession.
What do you think of the predictions of the MPS strategist? Let us know in the comments section.
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