FACTBOX-Wall St banks see one more Fed rate-hike as recession expectations mount

(Updates Nomura's Fed forecast; adds recession view from Citi and Credit Suisse) April 19 (Reuters) - Most major U.S. banks expect the Federal Reserve to raise interest rates by another 25 basis points next month, following evidence of sticky inflation and a strong labor market. Money markets are currently pricing in a roughly 82% chance of a 25bps hike in May. Such a hike will bring the Fed Funds rate increase for this cycle to 5%, taking the rate to the 5% to 5.25% range. Most traders expect a pause thereafter and see rate cuts beginning in the second half of the year. Following are forecasts from some big U.S. banks and their global counterparts:

May Fed hike Terminal Rate U.S. recession forecast Bank forecast Expectation
J.P.Morgan 25 bps 5% - 5.25% Sees a U.S. recession occurring in Q4 2023 Morgan 25 bps 5% - 5.25% - Stanley
BofA 25 bps 5% - 5.25% Sees meaningful risk of contraction in Q2
UBS 25 bps 5% - 5.25% - Deutsche 25 bps 5.10% Expects moderate recession Bank starting in Q4 2023 Goldman 25 bps 5% - 5.25% Sees 35% probability of U.S. Sachs entering a recession over the next year Barclays 25 bps 5% - 5.25% - Citigroup 25 bps 5.5% - 5.75% Expects U.S. recession in Q4 2023 versus Q3 expected earlier Societe 25 bps 5.5% - 5.75% - Generale
Wells Fargo 25 bps - Sees recession as likely in the back half of the year Nomura 25 bps - - Credit - - Sees 80% chance of a U.S. Suisse recession in the next 12 months

(Compiled by Broker Research team in Bengaluru; Editing by Devika Syamnath and Sriraj Kalluvila)

Reuters

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FACTBOX-Wall St banks see one more Fed rate-hike as recession expectations mount

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