The US if faced with the "triple triplet" of economic recession, banking crisis and worrying corporate earnings prospects.
ING noted that the ECB's most recent survey of bank lending suggests that the upcoming SLOOS survey is "unlikely to be satisfactory". The group stated: "The recent pressures on the banking sector will significantly tighten lending standards, which will have a significant dampening effect on economic activity and significantly reduce the need for further rate hikes."
How should the Fed on the edge of the cliff choose? However, the still strong job market and inflation that is difficult to cool down also make the Fed's choice more difficult.
Sean Snaith, director of the Economic Forecasting Institute at the University of Central Florida, said: Interest rates will have to stay high, and this strength in the labor market makes it harder for the Fed to keep lowering inflation.
Roger Hallam, global head of rates at Vanguard Asset Management, said that while the Fed's rate path hinges on upcoming inflation data, "the Fed does recognize that there are significant pressures on the banking sector and there are still significant challenges for them to address."
