Goldman Sachs Chief Economist Jan Hatzius has reduced the likelihood of a US recession from 25% to 20% in the next year.

He believes that lowering inflation won’t cause a recession, as consumer and producer price inflation slowed in June.

Hatzius predicts slower-than-average economic expansion due to slower real disposable income growth and reduced bank lending.

He believes the Fed will cut interest rates to boost the economy due to lower inflation.