US Federal Reserve Staff said on Wednesday evening that Fed staff economists no longer foresee a recession, given the resilience of the economy recently, although a slowdown in growth later this year is expected.

However, staff economists have envisioned a ‘mild recession’ later this year. "Given the resilience of the economy recently, they are no longer forecasting a recession,” Chair Jerome Powell said at a press conference.

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The Federal Reserve raised its key interest rate for the 11th time in 17 months to 5.3% from 5.1%, which is the highest since 2001. The streak of continuous hikes intend to curb inflation but it also carries the risk of moving into or triggering recession in the near future.

The Fed’s latest move could further lead to increase in the costs of mortgages, auto loans, credit cards and business borrowing. Powell further said that the central bank has so far made no decision about any future hikes but warned that the battle against inflation isn’t over yet.

"The process of getting inflation down to 2% has a long way to go,” Powell said. He also stressed that the Fed’s policymakers will assess a range of upcoming economic data in determining actions to be taken at their next policy meeting, if required.

However, in the last officials meeting, they gave a hint that they expected to raise rates twice more. In their next official meeting in September, they will have much more data in hand — two more inflation reports, two reports on hiring and unemployment and updated figures on consumer spending and wages, Powell said.

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In a statement, the Fed said the economy “has been expanding at a moderate pace,” a slight upgrade from its assessment in June.

Indian analysts, on the other hand, say that the US economy is likely to be in recession in the next quarter. “M2 money supply has contracted YoY for the past 6 months, the first such decline in more than 80 years. We expect this to drag the US economy into recession in the current quarter. Without at least a mild recession, core PCE inflation will stay higher for longer,” says ICICI Securities in its report.

It further said, “Our baseline scenario entails the unemployment rate rising above 4% in Q4CY23, thus precluding the need for any further rate hikes after a final hike of 12.5bp to 5.5% at the Sep’23 FOMC meeting.”