The U.S. consumer price index released on the 12th showed that inflation has begun to slow, with annualized inflation falling to 6.5%, the lowest since October 2021. Interest rate futures data shows that it is expected that the Fed will raise interest rates by 0.25% after the February 1 meeting, and it is estimated that February may be the last rate hike in this cycle.
In an interview with Bloomberg, Summers said that the Fed’s interest rate hike cycle may be coming to an end, but it is still too early to say that the Fed will stop raising interest rates, and it may be more appropriate to discuss it in February.
Summers, who is currently a professor at Harvard University, has always believed that if US inflation falls back to the Fed’s 2% target, then the US economy will definitely fall into recession. However, Summers believes that 6% inflation rate is still high. He suggested that it would be more appropriate to monitor inflation using the Employment Cost Index (ECI), which will be published on January 31.
In addition, the Goldman Sachs investment strategy team also expected on the 13th that even if the US economy falls into recession this year, stocks can still bring profits to investors. He expects the S&P to end the year in a range of 4,200 to 4,300 points, an upside of at least 12% from the end of last year.
The team estimates that the probability of the U.S. economy falling into a recession is between 45% and 55%, but it is believed that the recession is only mild, and the U.S. stock market will first fall and then rebound. Historical data shows that the stock market bottoms out and recovers three months before a recession ends.
Brian Moynihan, chief executive of Bank of America, also said that the U.S. economy will fall into a mild recession this year, but he is also preparing for the possibility of worse. Bank of America’s pessimistic estimate is that the U.S. unemployment rate will rise to 5.5% this year and remain above 5% next year.
Jamie Dimon, CEO of JPMorgan Chase, pointed out that the US economy is currently performing strongly, but there are challenges in the outlook, and many factors are highly uncertain, including: changes in the war between Russia and Ukraine, the energy crisis, inflation trends and the interest rate environment, etc. Wait.