Although inflation is displaying signs of moderating, according to Bank of America CEO Brian Moynihan, the US economy will still experience a recession.
The Wall Street executive forecast a minor drop on the company’s quarterly results call since consumers are still in good shape.
Inflation Prediction Possible Economic Slowdown
The forecast comes as some Wall Street analysts have predicted a sharper decline as a result of the central bank’s program to tighten up the money supply.
Over the course of a year, the Federal Reserve raised interest rates nine times as inflation reached 40-year highs.
For its part, Bank of America predicts that the annualized GDP will decrease by 0.5% to 1% before turning positive in 2024.
In another article, BlackRock CEO Larry Fink dismissed fears of a 2023 recession by pointing to the massive amount of stimulus that the Infrastructure Bill, the Chips and Science Act, and the Inflation Reduction Act are injecting into the economy.
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Drops to Lowest Rate in 10 Months
Slower than anticipated, the US annual inflation rate fell to 5% last month, marking its lowest level since May 2021.
According to the consumer price index report made public by the Labor Department on Wednesday, annual inflation decreased for the ninth straight month in March after peaking at 9.1 percent in June.
Although some relief from the growing costs thanks to the decreased trend, inflation is still much higher than the Federal Reserve’s target level of 2%.
The fear of a bigger financial crisis appeared to fade following the failure of two banks last month, but the Fed is still expected to hike its benchmark interest rate at least once more when it meets next month.
Nevertheless, the Dow Jones Industrial Average increased at the opening bell by 79.42 points, or 0.24 percent, as Wall Street estimated the likelihood that the Fed will stop raising interest rates as soon as possible.
March grocery costs were 0.2 percent lower than February prices, largely due to lower egg prices.
As supplies started to increase after a crisis scarcity brought on by an avian flu outbreak, egg prices fell substantially in March, falling 10.9 percent from the previous month. Even so, egg costs have increased by more than a third since last year.
While gasoline prices increased 1% from February to March, they nevertheless remained 18% lower than they were 12 months prior, when Russia’s invasion of Ukraine caused a sharp rise in global oil costs.
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