Claude Code keeps auto-retrying indefinitely after hitting usage/token limit instead of stopping

Bug description

When Claude Code hits a token/usage limit during a running turn, it does not stop. It keeps auto-retrying indefinitely and I have to manually press the stop button every time. Expected behavior per docs: usage-limit-reached should be a hard stop, not retried.

Environment

• Claude Code version: 2.1.204
• Platform: Windows 10 Education 10.0.19045
• Interface: VS Code extension

Steps to reproduce

1. Run a long task until the usage/token limit is reached mid-turn
2. Observe Claude Code showing retry countdowns and retrying repeatedly instead of stopping
3. Manual stop is required to end the loop

Related issues

Possibly related: #35744, #36320, #23115