Moody's Warns Rising Rates May Harm Growth

Mark Zandi, the Chief Economist at Moody’s, warned that raising U.S. interest rates threatens economic growth and increases market pressures, with further hikes likely over the coming year. He explained that sustained high interest rates for more than a few months could trigger a wave of corporate bankruptcies and worsen household conditions. However, technology companies that rely on borrowing might avoid the impact of these increases thanks to their high profit margins. He noted that the current rise in long-term yields reflects geopolitical tensions and uncertainty, warning of a potential US debt ceiling crisis this fall that could weaken the bond market. He added that the impact of rising interest rates on the stock market would be gradual, with fears of companies, especially those in artificial intelligence, missing earnings expectations and experiencing setbacks.

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