Goldman Sachs Group Inc. economists have joined Wall Street colleagues in predicting that the Federal Reserve will raise interest rates more aggressively than they previously expected.
Economists led by Ian Hatzius now predict that the Fed will raise the near-zero benchmark by 25 basis points five times this year, rather than four times. The benchmark will therefore be 1.25-1.5% by the end of the year.
Goldman Sachs now sees shifts in March, May, July, September and December. They also expect officials to announce the start of balance sheet cuts in June.
The move comes days after Fed Chairman Jerome Powell said officials were ready to raise rates in March and left the door open for a change at each meeting if needed to rein in the fastest inflation in 40 years. A government report on Friday showed that the employment cost index rose 4 per cent year-on-year to December, the highest in two decades.
"Evidence that wage growth is above levels consistent with the Fed's inflation target has strengthened and we have revised our inflation trajectory upwards," Goldman Sachs economists said in a report to clients. "In addition, Chairman Powell's comments earlier this week made it clear that Fed guidance is ready for a more aggressive pace of tightening."
They said the Fed could still switch if market conditions changed or the economy slowed much faster than forecast, or tighten monetary policy even more than forecast if inflation remained high enough.
Although they agreed that the Fed would do more than they had previously expected, banks were divided this week on how aggressive policy would be.
Let me introduce you to MetaTrader 5 best trading tool at the moment.
Bank of America Corp. now predicts seven rate hikes in 2022 , BNP Paribas SA predicts six and JPMorgan Chase & Co. and Deutsche Bank AG predict five.
Nomura Holdings Inc. even believes the central bank will raise rates by 50 basis points in March, the biggest move since 2000.
Bloomberg Economics is sticking to its forecast of five hikes earlier this month, although chief economist Anne Wong said this week there is a risk of six hikes.
Read also: US stock futures rise as investors welcome positive Omicron data and economic data ahead of holidays
You are the best….much love.
I love an Ism-Free space! Peace and light.
This is a great policy because now you can make sure that people who don’t agree with you can’t challenge you in front of everyone. You’re awesome!! xxx peace and liberty and love.
actually, it’s a great policy because i don’t have to deal with nitwits like you who think that you’re entitled to be heard simply because you have awesome thoughts about how awesome Greenwald is and also, too free Bradley Manning. You insulted a co-blogger. This is my blog. You don’t have a right to be here. Go back to Salon.
Toodles!
Too many people out there in the world think they have some sort of right to piss on someone else’s living room floor in full view of the entire assembly. Fuck that noise. Stab ‘em hard, ABL.