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Soros predicts US economy will slip into recession in 2007
By John Burton in Singapore
Published: January 10 2006 02:00 | Last updated: January 10 2006 02:00

George Soros, the US financier, yesterday predicted that the US
economy could suffer a recession in 2007 owing to falling housing
prices as the US tightens interest rates, with a "reasonably
significant chance" that the global economy could slow as a result.

There was a risk that the US Federal Reserve would raise interest
rates more than necessary to curb inflation, resulting in a hard
landing for the US economy, Mr Soros told a forum of the Singapore
Institute of International Affairs. He expected the federal fund rate
to peak at 4.75 per cent, up from 4.25 per cent.

Although the Fed is aware of the dangers, "almost inevitably, they
have got to overshoot because they can't stop [raising interest rates]
until the economy shows signs of a slowdown. By the time it shows
those signs, it may be a little too late".

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