Sunday, June 4, 2023
HomeEconomyTighter lending threatens growth, jobs, chance of hard landing rises - MS

Tighter lending threatens growth, jobs, chance of hard landing rises – MS

By Senad Karaahmetovic

Morgan Stanley economists believe the Federal Reserve will decide to raise the benchmark interest rate

Three basis points next week as it continues to struggle with persistent inflationary pressures and a strong labor market.

They stand ready to adjust rates and balance sheet paths if conditions warrant,’ they told clients in a note.

costs, which would result in more Tighter lending standards, slower loan growth, and wider loan spreads.”

“We already expect economic growth and job growth to slow significantly in the coming months, while credit conditions The prospect of a sharp tightening increases the risk of a soft landing turning into a hard one,” they added.

Morgan Stanley analysis suggests that lending standards permanence for p C&I loans + pt tightening leads to 35 bp rises in unemployment

over the next two years.

“Despite recent headlines, job growth could slow rapidly as a result.”

They urged investors to monitor weekly initial jobless claims for Get the evidence, but also warn that tighter lending conditions will take time to show up in macro data.

continues to rise,” they concluded.




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