Chance of a deeper recession in the US growing, says BoA's Bhave as all eyes on Fed rate decision

The US economy has been going through a challenging phase and there is a chance of a deeper US recession than the forecast of a mild recession. This is based on several economic indicators, including job data, inflation, and consumer spending. Despite some positive signs, such as an increase in consumer confidence, there are still several factors that could push the US economy into a deeper recession.

These predictions are not set in stone and are subject to change based on new economic data. However, the fact that Aditya Bhave, Senior US Economist at Bank of America Securities is predicting a deeper US recession is a cause for concern. The US economy has been through several difficult periods in the past, and it's important that policymakers take the necessary steps to support the economy and protect consumers.

“The risks are more evenly balanced, where on the one hand there is still a chance of no landing and on the other hand there is a chance of a deeper recession than what we were forecasting,” Bhave told CNBC-TV18.

The Federal Reserve has been closely monitoring these economic indicators and has already taken several steps to support the economy. However, according to Bhave, the Fed is expected to pause in June but will keep options open to hike in the future. This means that the Fed is likely to take a wait-and-see approach to determine the best course of action.

He said, “We think that they will use language such as further rate hikes might yet be appropriate, suggesting that they are expecting to pause in June, but they will still keep the option open to hike.”

Bhave also predicted to expect another 25-bps hike in June if data is strong and financial stability is seen. However, the decision to hike will depend on several factors, including the strength of the US economy, inflation levels, and the overall stability of the financial system.

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