Exclusive | The US may avoid a recession even as Fed is expected to increase rates for the seventh time, BIS head says
- The general manager of BIS believes the US can avoid a recession, but six out of 10 institutional investors said they see the slump as inevitable
- The Fed, European Central Bank and Bank of England are expected to increase their key rates by 50 basis points in the closing days of 2022, according to DWS
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BIS chief Carstens: High interest rates to stay even if a US recession might be 'avoided' in 2023
The US may be able to avoid a recession as recent data on jobs and economic growth was better than expected, easing concerns about the negative impact of interest rate hikes, according to the head of the global central bank, speaking ahead of several key policy meetings this week.
Agustin Carstens, general manager of the Bank for International Settlements (BIS), said the US and many central banks have made the right move by increasing interest rates to control runaway inflation, but he played down concerns over a recession.
“The most recent figures on the [US] job market and economic activity have been better than expected [and] surprised on the upside,” Carstens said in an interview with the South China Morning Post in Hong Kong on December 6. “A few months ago, I probably was a little more concerned about the impact of higher interest rates.”
The US reported stronger-than-expected employment data for November, with companies adding 263,000 workers and hourly wages rising at an annual rate of 5.1 per cent.
“Without [being] completely in the zone where we can declare victory, [it’s] so far so good,” he said. “There is a fair chance that a recession might be avoided. It is in the realm of possibilities.”