According to Nomura Holdings Inc. economists, the U.S. economy is likely to face a mild recession by the end of 2022 as the Federal Reserve raises rates to fight inflation, Bloomberg writes.

Nomura analysts are confident: financial conditions in the U.S. will tighten further, consumer sentiment will worsen, energy and food supply disruptions as the outlook for global growth worsens day by day.

“Given the rapid slowdown and the Fed’s commitment to restoring price stability, we believe that a moderate recession that began in the fourth quarter of 2022 has now become even more likely,” analysts Aichi Amemiya and Robert Dent wrote in a note.

Americans’ pandemic-era excess savings and strong consumer balance sheets will help somewhat mitigate the impact of a recession, but the economists noted that the government’s monetary and fiscal policy efforts will be held back by high inflation.

Nomura lowered its forecast for U.S. real GDP for this year to 1.8% from 2.5%, while its forecast for next year is down 1% from the 1.3% growth previously predicted.

Nomura’s forecast is fully consistent with the official view of the economic situation in the country, which was expressed by U.S. Treasury Secretary Janet Yellen on Sunday: according to her, “unacceptably high” consumer prices are likely to persist until 2022, and she expects a slowdown in the U.S. economy.

Echoing her views was a separate statement by Federal Reserve Bank of Cleveland Governor Loretta Mester on Sunday that the risk of recession in the U.S. economy is increasing and that it will take several years to return to the central bank’s 2% inflation target.

Analysts expect a rate hike to occur in 2023 as well, but with a slightly lower final rate – it will be in the 3.50-3.75% range in February instead of the previous forecast of 3.75-4.00%.