Maya MacGuineas, Committee for a Responsible Federal Budget president, and Krishna Guha, Evercore ISI head of global policy, join ‘The Exchange’ to discuss the looming government shutdown deadline, increasing U.S. debt, and more….(read more)

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The possibility of a U.S. recession with rising interest rates is unlikely, according to Krishna Guha, vice chairman of Evercore ISI and an expert on global economic policy.

According to Guha, there are several factors that make the prospect of a recession with rising interest rates improbable. One of the key reasons is the current stance of the Federal Reserve, which has signaled a commitment to keeping interest rates low in order to support the economy.

Guha points out that the Federal Reserve has made it clear that it will be patient in raising interest rates and will take into account a range of economic factors before making any adjustments. This cautious approach is intended to support continued economic growth and avoid any detrimental impact on the recovery.

In addition, Guha notes that there are several structural factors in place that are likely to prevent a significant rise in interest rates. These include low inflation and the ongoing effects of the pandemic, which continue to present challenges to the economy.

The recent surge in inflation has sparked concerns about a potential rise in interest rates, but Guha believes that this is unlikely to occur in the near future. He points out that while there may be temporary spikes in inflation, the underlying factors driving this inflation are transitory and are not likely to lead to sustained increases in interest rates.

Furthermore, Guha emphasizes that the Federal Reserve’s focus on achieving maximum employment and supporting a strong labor market will also play a role in keeping interest rates low. With the central bank prioritizing job growth and economic recovery, it is unlikely to take actions that could derail these efforts.

Overall, Guha’s analysis suggests that the combination of the Federal Reserve’s cautious approach and the structural factors at play make the prospect of a recession with rising interest rates unlikely. While challenges remain, including the ongoing impact of the pandemic and potential inflationary pressures, the current economic outlook points to continued support for the recovery.