(Bloomberg) -- Barclays Plc economists now see a US recession taking place one quarter later than expected in the wake of resilient economic activity, which should lead the Federal Reserve to delay the start of interest-rate cuts.

The US should experience a “shallow recession” from the second to fourth quarters of 2023, economists led by Marc Giannoni said in a note Tuesday. With the economic downturn beginning three months later than originally projected, they now see the Fed waiting longer before cutting interest rates, forecasting reductions of 25 basis points at both the November and December meetings next year.

With spending momentum now projected to carry into early 2023, Barclays economists see gross domestic product expanding 1.5% in the current quarter from the prior three months, compared with an expectation of no growth before. For the first quarter of 2023, they forecast GDP to be flat, compared with a prior estimate for a 0.5% contraction.

As a result, the economists see the Fed raising the target for its benchmark rate to a peak range of 5% to 5.25% by March via 50 basis-point increases at gatherings next month and in February, and a quarter-point hike in March. 

The range will ease to 4.5% to 4.75% by the end of next year, reaching 3% to 3.25% by the end of 2024.

“Rates remain well above neutral through 2024, reflecting the committee’s intention to keep its monetary stance tighter for longer to manage risks of more-sustained inflationary pressures,” they wrote.

©2022 Bloomberg L.P.