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Mark Zandi, chief economist at Moody’s Analytics, warned that higher interest rates are already weighing on the economy—but he did not say a recession or market collapse is inevitable. In a September 28, 2026, interview with Yahoo Finance, he said the outcome depends on how long rates stay elevated and whether pressures such as the Iran conflict and oil prices ease.
What Zandi means by “already damaging”
“I think the economy is going to start to sag as a result of the rate increases,” Zandi told Yahoo Finance senior reporter Jennifer Schonberger. He pointed to both the Federal Reserve’s benchmark policy rate and higher long-term bond yields, which can feed into borrowing rates for households and businesses. His warning is about mounting economic strain, not proof that a downturn has already begun.
Schonberger’s September 28 report said the Fed had raised its policy-rate range by 0.25 percentage point on September 16, to 3.75%–4%, the first increase in more than three years. Those are figures reported by Yahoo Finance, not independently verified economic data in this account.
How long can rates stay high before the economy struggles?
Duration is central to Zandi’s forecast. In his less damaging scenario, elevated rates last only a few months, the Iran conflict ends, oil prices fall, and the further rate increases markets anticipate do not occur. Under those conditions, he said higher rates would hurt the economy but would not hobble it.
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His more troubling scenario is a prolonged period of high rates extending into the following year. “But if it goes on for much longer than that and into next year, I think the economy will really start to struggle,” Zandi said. This is a conditional forecast, not a declaration that a recession is certain.
What borrowing pressures did the report identify?
The article described a market backdrop in which long-term yields and borrowing costs were already elevated. All the figures in this table are as reported by Yahoo Finance on September 28, 2026; they are a time-specific snapshot and may have changed.
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| Measure | Figure reported by Yahoo Finance | Context in the report |
|---|---|---|
| 10-year Treasury yield | 5.22% | Reported for that Monday, after reaching a 20-year high the preceding week. |
| 30-year fixed mortgage rate | 7.5% | Described as the highest since spring 2024. |
| Expected additional rate hikes | Three to four over the following year | Market pricing, including one more in 2026—not a Federal Reserve commitment. |
| September policy-rate increase | 0.25 percentage point; range raised to 3.75%–4% | Reported as the first hike in more than three years. |
Zandi said additional rate increases of the kind markets had priced in would further burden households with credit-card debt and home-equity lines of credit. He also warned that companies could face bankruptcies if borrowing costs remained high. These are risks he described, not a tally of defaults that had already occurred.
Who may be most exposed—and who might cope better?
Households carrying variable or costly debt
Credit-card balances and home-equity lines of credit were among the household exposures Zandi named. Higher borrowing costs can make existing debt more expensive to carry, leaving less room in a household budget for other spending.
Heavily indebted companies
Zandi singled out companies with substantial debt, including businesses owned by private-equity firms that had extended debt maturities to keep payments low. If elevated borrowing costs persist, refinancing or servicing debt could become harder; the report did not establish that these firms had already defaulted.
AI infrastructure investors
Zandi saw a possible exception among technology giants investing heavily in AI infrastructure. In his view, hyperscalers’ high margins and expected profits could help them absorb higher interest costs. He also said, “AI is running on its own dynamic, and expectations for future profits are quite high.” That is his assessment, not a guarantee that these companies are insulated.
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Why rising long-term yields are being interpreted differently
The Yahoo Finance report described competing explanations for higher long-term yields. Fed officials, including Warsh, viewed rising yields as a sign of robust growth. Zandi instead pointed to geopolitical friction and uncertainty, as well as a possible premium associated with the Fed chair no longer providing forward guidance. The report presents these as competing interpretations, not settled causes of the yield rise.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Does Zandi expect higher rates to trigger a stock-market crash?
No. Zandi characterized the effect on valuations as gradual pressure rather than a sudden break: “The run-up in rates is a corrosive on valuations. It’s not a cliff event.” He used a marble-floor analogy when discussing AI-related valuations, but did not predict that higher rates alone would cause an abrupt stock-market collapse.
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The current-market figures and interview statements here are those reported by Jennifer Schonberger in Yahoo Finance on September 28, 2026. Yields, mortgage rates, oil prices, market expectations and Fed decisions can change quickly, so the figures describe that report’s moment rather than current levels indefinitely.
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