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The
brokerage earlier expected the economy to enter a mild recession
as the Federal Reserve tightened interest rates to tame
inflation, narrowing the window for a soft landing.
Deutsche Bank said in a note on Monday that it now expects the
U.S. economy to grow by 1.9% this year, on a quarterly average
basis, compared with its prior forecast of 0.3%.
"Though the economy continues to face several headwinds –
namely, still-tight credit conditions, rising consumer
delinquency rates and a slowing labor market – the resilience to
date points to a more benign slowdown in 2024 than we had
previously projected," said Matthew Luzzetti, the brokerage's
chief U.S. economist.
Deutsche Bank still expects the Fed to start easing interest
rates from June, but now expects 100 basis points (bps) of rate
cuts this year, less than its earlier expectation of 175 bps.
The U.S. economy grew a faster-than-expected 3.3% in the fourth
quarter, amid strong consumer spending, with growth for the full
year coming in at 2.5%, shrugging off dire predictions of a
recession after the Fed's aggressive rate hikes.
(Reporting by Roshan Abraham in Bengaluru; Editing by Savio
D'Souza)
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