Tag: recession

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‘Recession is underway’

If layoffs accelerate in the next few months, a recession “will be underway”, the report said…reports Asian Lite News

A recession in 2023 appears inevitable and layoffs in tech and finance will spread to other sectors, especially amid the great banking breakdown, media reports said.

A commentary in Fortune said that the world is witnessing the beginning of increasing unemployment in the financial sector and high-tech, which “benefitted from the US Federal Reserve’s easy money policies since the Great Recession of 2008”.

In an effort to cool off the economy and get inflation to its target rate, the Federal Reserve began to increase the Fed funds rate rapidly throughout 2022. Rates increased from virtually zero in March of that year to a target range of 4.75-5.00 for March 2023.

“Nevertheless, the latest CPI data reveal prices rose 6 per cent in February 2023 compared with the same month the previous year – well above the new Fed funds target rate of 5 per cent,” wrote Murray Sabrin.

The collapse of Silicon Valley Bank and Signature Bank “complicates” the Fed’s task of “managing” the macroeconomy by moving the Fed funds rate up and down to dampen inflation (and inflation expectations) and boost economic activity.

“Additionally, the Fed is responsible for ensuring financial stability when banks fail and preventing more bank runs throughout the country,” the commentary read.

One of the best indicators of an impending recession is the inverted yield curve, particularly the difference between the 10-year Treasury note and the three-month T-bill.

“The curve inverted at the end of October 2022. Historically, when short-term rates rise above the long-term rate, a recession begins about a year later,” the commentary said.

If layoffs accelerate in the next few months, a recession “will be underway”.

More than 500 tech companies have laid off over 1.5 lakh employees in the first three months of 2023.

As layoffs continue to deepen amid recession fears, more than 23,000 employees have been laid off by at least 82 startups in India, and the list is only growing.

In total, more than 3.1 lakh tech employees have lost jobs in 2022 and till March this year.

ALSO READ: Giants succumb to layoff trend

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Business India News

Layoffs continue to deepen amid recession

Social media company ShareChat (Mohalla Tech Pvt Ltd) laid off 20 per cent of its workforce due to uncertain market conditions…reports Asian Lite News

As layoffs continue to deepen amid recession fears, more than 23,000 employees have been laid off by at least 82 startups in India, and the list is only growing, the media reported.

According to a report in Inc42, 19 edtech startups, including four unicorns, have alone sacked more than 8,460 employees to date.

The startups that lead the layoff tally include BYJU’S, Ola, OYO, Meesho, MPL, LivSpace, Innovaccer, Udaan, Unacademy and Vedantu, among others.

Home interiors and renovation platform Livspace this week laid off at least 100 employees as part of cost-cutting measures.

Last week, SaaS platform for online stores Dukaan laid off nearly 30 per cent of its workforce, or around 60 employees — its second layoff in about six months.

Healthcare unicorn Pristyn Care has also sacked up to 350 employees across departments and impacted employees from sales, tech and product teams.

Online higher education company upGrad laid off nearly 30 per cent of its workforce at its subsidiary “Campus”.

In February, end-to-end global delivery management platform FarEye laid off 90 employees, which was its second layoffs in about eight months amid the economic meltdown.

With the onset of January, more and more Indian startups are slashing jobs across the spectrum.

Social media company ShareChat (Mohalla Tech Pvt Ltd) laid off 20 per cent of its workforce due to uncertain market conditions.

The layoff impacted about 500 people at the company.

National Public Radio lays off 100 employees

National Public Radio (NPR), a Washington-based nonprofit media organisation, has begun to sack 10 per cent of its staff, or about 100 employees, and stopped production of four acclaimed seasonal podcasts, as it struggles with financial woes.

“We literally are fighting to secure the future of NPR at this very moment by restructuring our cost structure. It’s that important. It’s existential,” said NPR chief executive John Lansing.

Most affected NPR employees will stay on until April 28.

NPR aims to cut back its workforce from approximately 1,200 to about 1,050 employees.

Last month, the global media outlet announced plans to lay off about 10 per cent of its current workforce, as its financial outlook has “darkened considerably over recent weeks.”

According to NPR, its financial woes can be traced mainly to advertisers’ growing reluctance to spend money, particularly on podcasting, in an uncertain economy”.

Other media outlets, including Gannett, CNN and Vox Media, and tech powerhouses such as Amazon, Google and Meta also have had layoffs in recent months.

Several veteran NPR staffers like Karen Grigsby Bates and Sylvia Poggioli announced her retirement on social media.

The layoffs also affected people who work behind the scenes to produce the shows and podcasts, design visual elements for the web, and conduct audience research.

National Public Radio.(photo:wikipedia)

According to Lansing, NPR structured the layoffs in such a way that its workforce demographics remain unchanged and “42 per cent of remaining employees are people of colour and 58 per cent are women”.

NPR last year froze most vacant positions and reduced travel.

“We’ve tried very hard to sustain the essential things that will keep us moving forward,” Anya Grundmann, NPR’s senior vice president of programming and audience development, was quoted as saying.

The nonprofit network’s layoffs represent its largest reduction in staff since the 2008 recession.

It serves as a national syndicator to a network of over 1,000 public radio stations in the US.

ALSO READ-Layoffs hit Nike

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-Top News London News UK News

Rishi in trouble as recession looms

The grim outlook for the year ahead puts the UK far behind its counterparts in the G7 group and the only country expected by the IMF to suffer a year of declining GDP…reports Asian Lite News

The United Kingdom is a striking exception to the IMF’s brighter outlook for 2023. It has forecast that the British economy will shrink 0.6% in 2023; in October, the IMF had expected growth of 0.3%. Higher interest rates and tighter government budgets are squeezing the British economy.

“These figures confirm we are not immune to the pressures hitting nearly all advanced economies,’’ Chancellor of the Exchequer Jeremy Hunt said in response to the IMF forecast. “Short-term challenges should not obscure our long-term prospects — the U.K. outperformed many forecasts last year, and if we stick to our plan to halve inflation, the U.K. is still predicted to grow faster than Germany and Japan over the coming years.”

But it nudged up its outlook for UK growth in 2024 to 0.9%, up from the 0.6% expansion previously forecast.

The grim outlook for the year ahead puts the UK far behind its counterparts in the G7 group of advanced nations and the only country – across advanced and emerging economies – expected by the IMF to suffer a year of declining GDP.

It comes against a backdrop of public sector strikes over pay and predictions that the UK is heading for a recession, with inflation still standing at more than 10%.

The IMF said Britain’s predicted GDP fall reflects “tighter fiscal and monetary policies and financial conditions and still-high energy retail prices weighing on household budgets”.

It follows efforts by Chancellor Jeremy Hunt last week to talk up the UK economy and its growth prospects in his first major speech in the post, declaring that “declinism about Britain was wrong in the past and it is wrong today”.

The IMF offered a chink of light in the otherwise gloomy economic update, predicting that the global slowdown will be shallower than first feared.

It upgraded its global growth forecast, to 2.9% in 2023 from the 2.7% predicted in October as it said the reopening of China after strict Covid restrictions has “paved the way for a faster-than-expected recovery”.

The IMF also said it believes global inflation has passed its peak and will fall from 8.8% last year to 6.6% in 2023 and 4.3% in 2024 as interest rate hikes by central banks begin to cool demand and slow price rises.

But it warned that, in the UK and Europe, surging prices and the impact of action taken to rein in inflation, will continue to weigh on the economy.

It said: “Consumer confidence and business sentiment have worsened. With inflation at about 10% or above in several euro area countries and the United Kingdom, household budgets remain stretched. The accelerated pace of rate increases by the Bank of England and the European Central Bank is tightening financial conditions and cooling demand in the housing sector and beyond.”

Chief economist for the IMF, Pierre-Olivier Gourinchas, explained there were three primary factors motivating the UK’s economic outlook.

He said: “First, there is exposure to natural gas… we’ve had a very sharp increase in energy prices in the UK. There is a larger share of energy that is coming from natural gas, with a higher pass-through to final consumers. The UK’s employment levels have also not recovered to pre-pandemic levels. This is a situation where you have a very, very tight labour market but you have an economy that has not re-absorbed into employment as many people as it had before. That means there is less output, less production. The third is that there is a very sharp monetary tightening because inflation has been very elevated, that’s a side effect of this high pass-through of energy prices.

“Inflation was 9.1% last year, and it’s expected to actually remain quite high in this coming year at 8.2% (so) the Bank of England has started tightening.

“The UK has a fairly high share of adjustable rate mortgages. So when the Bank of England starts increasing rates, it feeds into the mortgage rates that mortgage holders are paying, and that is also weighing down economic activity.”

Hunt said: “The Governor of the Bank of England recently said that any UK recession this year is likely to be shallower than previously predicted, however these figures confirm we are not immune to the pressures hitting nearly all advanced economies.

“Short-term challenges should not obscure our long-term prospects – the UK outperformed many forecasts last year, and if we stick to our plan to halve inflation, the UK is still predicted to grow faster than Germany and Japan over the coming years.”

The Treasury said since 2010, the UK had grown faster than France, Japan and Italy and that since the EU referendum in 2016, it had grown at “about the same rate as Germany”.

“Cumulative growth over the 2022-24 period is predicted to be higher than Germany and Japan, and at a similar rate to the US,” a spokesman said.

Economic forecasters are not always 100% right when it comes to predicting the future. The IMF has said its forecasts for growth the following year in most advanced economies like the UK’s have more often than not been within about 1.5 percentage points of what actually happens.

The IMF did not mention Brexit in its report as a factor for the UK not performing as well as others. Today marks three years since the UK left the EU.

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-Top News World News

‘Global recession likely in 2023’

World Economic Forum survey predicts Middle East and North Africa (MENA) and South Asia as the two strongest regions in 2023…reports Asian Lite News

About two-thirds of private and public sector chief economists in a World Economic Forum survey have said a global recession is likely in 2023 with almost 18 per cent saying it is “extremely likely”.

“Almost two-thirds of respondents consider a global recession to be likely in 2023, including 18 per cent who consider it extremely likely, more than twice as many as in the previous survey in September 2022,” said ‘The January 2023 Chief Economists Outlook’ by the World Economic Forum’s Centre for the New Economy and Society. However, views are divergent, with a third of respondents considering a global recession to be unlikely this year.

The survey aims to summarise the emerging contours of the current economic environment and identify priorities for further action by policymakers and business leaders in response to the compounding shocks to the global economy from geo-economic and geopolitical events.

The survey was conducted November-December 2022.

Regionally, the situation in Europe and the US is now stark, with 100 per cent of chief economists expecting weak or very weak growth for 2023 in the former and 91 per cent in the latter, the survey said.

War and international tensions continue to shape global economic developments, and every respondent viewed it as likely, with 73 per cent saying somewhat and 27 per cent saying extremely, that patterns of economic activity will continue to shift around the world in line with new geopolitical fissures and faultlines.

The two strongest regions in 2023 according to the survey are the Middle East and North Africa (MENA) and South Asia.

In South Asia, 85 per cent of respondents expect moderate (70 per cent) or strong (15 per cent) growth, a modest improvement since the September edition. Some economies in the region, including Bangladesh and India, may benefit from global trends such as a diversification of manufacturing supply chains away from China.

Although no regions are slated for very high inflation, expectations of high inflation range from 57 per cent of respondents for Europe to just 5 per cent of respondents for China. Following a year of sharp and coordinated central bank tightening, the chief economists surveyed expect the monetary policy stance to remain constant in most of the world this year.

However, a majority of respondents expect further tightening in Europe and the US with 59 per cent and 55 per cent, respectively.

At the start of 2023, concerns about the cost of living remain acute in many countries. Yet, survey respondents indicate that the cost of living crisis may be close to its peak, with a majority (68 per cent) expecting the crisis to have become less severe by the end of 2023. A similar trend is evident in the energy crisis, with almost two-thirds of respondents optimistic that conditions will have begun to improve by the end of the year.

The survey also asked chief economists to highlight any sources of optimism in the current global economic context. Three factors were mentioned repeatedly: The strength of household balance sheets, the peaking of inflation and the resilience of labour markets.

The outlook for the global economy is gloomy, according to the results of the latest survey of chief economists. Global growth prospects remain anaemic, and global recession risk high.

Despite some positive signals in the final months of 2022 – an easing of inflationary pressures, a modest uptick in consumer sentiment and stabilisation of commodity prices – almost one in five respondents now consider a global recession to be extremely likely in 2023, more than twice as many as in the previous survey in September 2022.

However, 32 per cent also expect a global recession to be extremely unlikely or somewhat unlikely, more than twice as many as in September. This polarised outlook reflects a weakening of growth expectations across most but not all regions and significant continued uncertainty about the effectiveness and duration of tightening policy measures.

The survey also highlighted significant regional divergence in growth expectations within a general pattern of weakened expectations relative to the last survey. The situation in Europe and the US is now stark, with 100 per cent of chief economists expecting weak or very weak growth this year in the former and 91 per cent expecting weak or very weak growth in the latter. This marks a significant deterioration in recent months: at the time of the last survey, the corresponding figures were 86 per cent for Europe and 64 per cent for the US.

The survey results for the 2023 outlook in China are polarised, with almost half of the respondents now expecting weak or very weak growth in China, with the other half expecting moderate or even strong growth.

In MENA, 70 per cent of respondents expect moderate or strong growth in 2023. While this overall proportion has slightly dipped since the September edition, expectations of strong growth have increased from 12-15 per cent.

In the East Asia and Pacific region, 37 per cent of chief economists expect weak growth in 2023, and 63 per cent expect moderate or strong growth, similar to September. However, that broad pattern masks a shift in expectations from strong to moderate growth since the last survey. (ANI)

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Business

Two recessions in same decade?

economy.

The global economy is projected to grow by 1.7 per cent in 2023 and 2.7 oer cent in 2024…reports Asian Lite News

Global growth is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russias invasion of Ukraine, according to the World Banks latest Global Economic Prospects report.

Given the fragile economic conditions, any new adverse development — such as higher-than-expected inflation, abrupt rise in interest rates to contain it, a resurgence of the Covid-19 pandemic, or escalating geopolitical tensions — could push the global economy into recession.

This would mark the first time in more than 80 years when two global recessions have occurred within the same decade, the World Bank said.

The global economy is projected to grow by 1.7 per cent in 2023 and 2.7 oer cent in 2024. The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95 per cent of advanced economies and nearly 70 per cent of emerging markets and developing economies.

“The crisis facing development is intensifying as the global growth outlook deteriorates,” said World Bank Group President David Malpass.

“Emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates. Weakness in growth and business investment will compound the already-devastating reversals in education, health, poverty, and infrastructure and the increasing demands from climate change.”

In the US, growth is forecast to fall to 0.5 per cent in 2023 — 1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970.

In 2023, euro-area growth is expected at zero per cent — a downward revision of 1.9 percentage points. In China, growth is projected at 4.3 per cent in 2023, 0.9 percentage point below previous forecasts.

Excluding China, growth in the emerging markets and developing economies is expected to decelerate from 3.8 per cent in 2022 to 2.7 per cent in 2023, reflecting significantly weaker external demand compounded by high inflation, currency depreciation, tighter financing conditions, and other domestic headwinds.

The report offers the first comprehensive assessment of the medium-term outlook for investment growth in emerging markets and developing economies. Over the 2022-2024 period, gross investment in these economies is likely to grow by about 3.5 per cent on average — less than half the rate that prevailed in the previous two decades.

ALSO READ: ‘Unpopular’ measures required to stabilise inflation: US Fed chair

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UK News

‘One-third of global economy to be hit by recession’

Georgieva said that the world faces a tougher 2023 as the three big economies – the United States, the European Union and China – are all slowing down simultaneously…reports Asian Lite News

One-third of the world economy will be in recession this year, International Monetary Fund chief Kristalina Georgieva told US television network CBS in an interview.

A recession is when the economy stops growing and starts shrinking. It occurs when the value of goods and services produced in a country, known as the gross domestic product, declines for two consecutive quarters or half a year.

Georgieva said that the world faces a tougher 2023 as the three big economies – the United States, the European Union and China – are all slowing down simultaneously.

“Even countries that are not in recession, it would feel like recession for hundreds of millions of people,” she added.

The head of the International Monetary Fund made the prediction at a time when the world is reeling under the impact of the war in Ukraine, inflation and the coronavirus pandemic.

In its World Economic Outlook report published in October, the International Monetary Fund had cut its global growth forecast for 2023 and warned that a third of the world economy will likely contract.

In the CBS interview, Georgieva said that the European Union has been badly hit by the Ukraine war and half of the bloc will be in recession. Sharing the same negative outlook for China, she said all this would culminate into negative trends globally.

“When we look at the emerging markets in developing economies, there, the picture is even direr,” she added. “Why? Because on top of everything else, they [other countries] get hit by high interest rates and by the appreciation of the dollar. For those economies that have high level of that, this is a devastation.”

Georgieva, however, predicted that the US may avoid recession due to its strong labour market. “If that resilience of the labor market in the US holds, the US would help the world to get through a very difficult year,” she added.

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-Top News Europe

Swedish govt expects recession to last until 2025

Brussels, Nov. 06 (Xinhua) -- A man wearing a face mask walks in the street during the COVID-19 pandemic in Stockholm, capital of Sweden, Nov. 3, 2020. (Photo by Wei Xuechao/Xinhua/IANS)

Unemployment is expected to grow to 7.8 per cent in 2023 and 8.2 per cent in 2024. Both figures are higher than in the previous forecast…reports Asian Lite News

Sweden will enter a recession in 2023 that is expected to last until 2025, the government said here on Thursday.

“The Swedish economy and households will be under pressure in the coming years,” Finance Minister Elisabeth Svantesson said when she presented the economic forecast at a press conference.

“The recession is expected to be more prolonged than forecast in the Budget Bill, and it does not appear that it will hit bottom until 2024,” Svantesson said.

Inflation measured by the consumer price index (CPI) is expected to reach an average of 8.9 per cent in 2023, and combined with the rapidly increasing interest rates and the weakened demand in the rest of the world this is expected to lead to gross domestic product (GDP) shrinking by 0.7 per cent in 2023 — a downward adjustment from the previous forecast.

Unemployment is expected to grow to 7.8 per cent in 2023 and 8.2 per cent in 2024. Both figures are higher than in the previous forecast.

“In the current situation, it is important that fiscal policy be carefully considered. The worst-case scenario for households and businesses already facing financial difficulty would be a further increase in inflation. The government’s budget for next year has undergone cuts aimed at combating inflation, while providing room to act should the economic downturn be worse than expected,” Svantesson said.

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-Top News UK News

Brace for 2 years of recession  

UK’s manufacturing sector shrank by more than 4% this year, a survey found, with predictions of another sharp decline in 2023…reports Asian Lite News

UK’s manufacturing sector shrank by more than 4% this year, a survey found, with predictions of another sharp decline in 2023.

Deteriorating economic conditions both in the UK and abroad are imposing a “vice-like grip” on factories, industry body Make UK said Monday. Its outlook, based on a survey conducted with accountancy firm BDO LLP, showed a 4.4% contraction this year and 3.2% drop next year.

UK warned that this year’s decline is partly the result of tough comparisons, given the economic rebound from Covid in 2021, and a methodological change. Still, the forecasts have been consistently revised downward in recent months.

“There is simply no sugar-coating the outlook for next year and possibly beyond,” said Stephen Phipson, Make UK’s chief executive officer. “These are remarkably challenging times which are testing even the best and most successful of companies to the limit.

The lobby group called on Prime Minister Rishi Sunak’s government to loosen migration rules in a bid to ease labor shortages, extend relief on commercial property taxes to factories and boost tax breaks to encourage investment.

A country is in recession when its economy shrinks for two three-month periods in a row. The UK is expected to be in one by the end of the year.

A recession has been widely expected in the UK due to the prices of goods such as food, fuel and energy soaring, which is down to several factors, including the war in Ukraine.

Higher prices for goods has led to many households facing hardship and cutting back on spending, which has started to drag on the economy.

The Bank of England expects the UK recession to be the longest since records began in the 1920s and said unemployment will almost double.

Chancellor Jeremy Hunt said last month that he would try to make any recession “shallower and quicker” than predicted.

But he has warned of “eye-watering” decisions needed on public spending and taxation to “restore confidence and economic stability”.

Hunt said he was “under no illusion that there is a tough road ahead”.

The Office for National Statistics (ONS), which published the economic growth figures, said UK business investment had dropped in the three months to September and also remained below its pre-pandemic levels.

The performance of the economy is measured by the value of all the goods and services produced by the UK. This number is known as the gross domestic product (GDP).

The fall in GDP in the three months to September was driven by a decline in manufacturing, which was seen “across most industries”, the ONS said.

The ONS publishes its estimate of GDP and does sometimes revise it upwards or downwards. For example, it initially estimated that the economy shrank by 0.3% in August, but later revised that and said it shrank by 0.1%.

Darren Morgan, director of economic statistics at the ONS, said customer-facing industries also “fared badly”, with shops hard hit as the squeeze on household budgets meant people were spending less.

According to Morgan, the biggest concerns businesses said they were now facing were the rising price of raw materials and higher energy costs.

He said some firms had taken action to reduce costs by being “far more diligent”, switching to more energy-efficient equipment, and changing supplier.

Rachel Reeves, Labour’s shadow chancellor, said the latest economic figures were “another page of failure in the Tories’ record on growth”.

“Britain’s unique exposure to economic shocks has been down to a Conservative-led decade of weak growth, low productivity and underinvestment and widening inequality,” she added.

Martin McTague, chairman of the Federation of Small Businesses, called the latest economic figures “dreadful news” for firms that were already under pressure.

“Lower levels of reserves and resources mean they are more vulnerable to downturns, and at a time when confidence is deteriorating in both consumers and businesses, the outlook for the UK economy is now very bleak indeed,” he said.

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-Top News EU News

Most EU countries will be in recession in fourth quarter

European Commissioner for Economy Paolo Gentiloni speaks at the 2022 Autumn Economic Forecast press conference in Brussels, Belgium, Nov. 11, 2022. (Xinhua/Zheng Huansong/IANS)

The forecast projects real GDP growth in both the EU and euro area at 0.3 per cent — well below the 1.5 per cent and 1.4 per cent expected in the previous forecast from July…reports Asian Lite News

European Commissioner for Economy Paolo Gentiloni warned that the outlook for next year has “weakened significantly”, and that most European Union (EU) countries will be in recession in the fourth quarter of this year.

The EU economy is now “at a turning point” Gentiloni said while addressing a press conference in Brussels on Friday shortly after the European Commission announced that it had slashed its forecast for economic growth next year.

The European Commission’s autumn forecast predicted falling economic output in the last three months of this year and the first months of 2023, reports Xinhua news agency.

Elevated uncertainty, high energy price pressures, the erosion of households’ purchasing power, a weaker external environment, and tighter financing conditions are expected to tip the EU, the euro area and most member states into recession in the last quarter of 2022.

For 2023 as a whole, the forecast projects real GDP growth in both the EU and euro area at 0.3 per cent — well below the 1.5 per cent and 1.4 per cent expected in the previous forecast from July.

“The surge in energy prices and rampant inflation are now taking over and we are facing a very difficult period both from a social and economic point of view,” Gentiloni stressed.

“After a surprisingly strong first half of the year, the EU economy lost momentum in the third quarter, and recent survey data point to a contraction for the winter,” he said.

In addition, inflation has continued to rise faster than expected.

Accelerating and broadening price pressures in the first ten months of the year have moved the expected inflation peak to the fourth quarter of this year, and lifted the yearly inflation rate projection to 9.3 per cent in the EU and 8.5 per cent in the euro area.

Inflation is expected to decline in 2023, but to remain high at 7.0 per cent in the EU, and 6.1 per cent in the euro area.

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-Top News Economy USA

US will narrowly avoid recession: IMF chief

International Monetary Fund (IMF) Managing Director Kristalina Georgieva

IMF chief Kristalina Georgieva highlighted “significant downside risks” this year and especially in 2023, reports Asian Lite News

International Monetary Fund (IMF) Managing Director Kristalina Georgieva said that there is “a narrowing path” to avoiding a US recession, highlighting “significant downside risks” this year and especially in 2023.

“Based on the policy path outlined at the June FOMC (Federal Open Market Committee) meeting, and an expected reduction in the fiscal deficit, we expected the US economy will slow,” Georgieva said at a virtual press conference on the annual Article IV consultation to review the American economy.

With inflation well above the Federal Reserve’s longer-run goal and an extremely tight labour market, the Fed raised the target range for the federal funds rate at each of the past three meetings.

Last week, the central bank raised rates by 75 basis points, marking the sharpest rate hike since 1994.

Georgieva said the IMF believes the path for the policy rate that the Fed has signaled, to quickly get the federal funds rate to 3.5 to 4 per cent, is the correct policy to bring down inflation, but there may be “some pain” for consumers.

U.S. Federal Reserve Chair Jerome Powell (Xinhua_Liu Jie_IANS)

She also said that the IMF is mindful of the risks to the US economy. “We are actually seeing very significant downside risks this year and especially next year,” she said.

The IMF chief’s remarks came after Fed Chair Jerome Powell said earlier this week that the bank’s aggressive rate hikes could tip the US economy into recession.

“It’s not our intended outcome at all, but it’s certainly a possibility,” Powell told lawmakers at a Congressional hearing.

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