The banking disaster will tilt US into recession, say Fed economists

The banking crisis will tilt US into recession, say Fed economists


Washington, DC

The fallout from the recent banking crisis is likely to push the US economy into a mild recession later this year, according to notes from the Federal Reserve’s March policy meeting, released on Wednesday.

Since November 2022, staff economists at the Federal Reserve have predicted subdued growth and a weakening economy during policy decision meetings. in March, they said the banking crisis heightened that forecast to a recession.

Taking into account “the potential economic effects of the recent banking-sector developments,” Fed economists’ “projection at the time of the March meeting included a mild recession starting later this year,” noted minutes from the Fed’s most recent two-day monetary policy meeting on March 21-22.

This is the first time in the current hiking cycle that staff economists have forecast such a recession.