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Federal Reserve staff projects 'mild recession' after banking sector turmoil

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Federal Reserve officials anticipated that the recent collapse of Silicon Valley Bank was likely to weigh on inflation and the broader U.S. economy, with central bank staff forecasting a 'mild recession' later this year.

Federal Reserve chair Jerome Powell speaks during a news conference following the last policy meeting in March. Photo: Chen Mengtong/China News Service/VCG via Getty Imageswas likely to weigh on inflation and the broader U.S. economy, with central bank staff forecasting a "mild recession" later this year, according to minutes of their last policy meeting in late March released on Wednesday.

to backstop the banking system had "helped calm conditions in the banking sector and lessen the near-term risks to economic activity and inflation."At the policy meeting, Fed officials agreed to raise rates for the ninth consecutive time by a quarter-percentage point. Some Fed officials, according to the minutes, said that move may have been appropriate "in the absence of the recent developments in the banking sector.": At the time of the meeting, Fed staff projected that the economy would enter a "mild recession" later this year before recovering over the next two years, according to the minutes.

 

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