In a recent speech, the head of Bank of America has warned that the US is facing the prospect of an economic downturn which may begin in the third quarter of 2023 and continue into the first quarter of 2024.

Bank of America CEO Brian Moynihan was speaking at the Financial Review’s Business Summit on Tuesday, when he predicted the downturn, but noted he did not believe it would be deep, and that it would allow interest rates to begin to fall in the second quarter of 2024.

Moynihan was quoted as saying, “It’s a very slight recession in the scheme of things. I don’t think you’ll see a deep recession. It will be more of a technical recession than it will be a deep drop in the US.”

A technical recession is defined as two consecutive quarters of economic contraction. It is deemed less severe than an official recession, which is declared by the National Bureau of Economic Research (NBER), based upon an analysis of a much broader swath of data than merely the GDP number. An officially declared recession is assumed to require more dire economic conditions than a technical recession, which lacks the NBER’s imprimatur.

According to Moynihan, the Wall Street bank’s forecasters are also estimating quarterly contractions of 0.5%-1%.

For roughly a year, the US Federal Reserve has been raising interest rates, seeking to cool off the economy and slow down a record level of inflation. Only recently has the pace of the rate hikes slowed, with February seeing the central bank approve a 25 basis point rate hike, the smallest seen in several months.

Although the rate of consumer price growth has slowed, continued strength in the job market has kept investors on edge as to the future of the Fed’s monetary policy.