© Reuters. Goldman now sees Fed delivering three more rate hikes this year

By Senad Karaahmetovic

Goldman Sachs analysts are now expecting the U.S. Federal Reserve to hike interest three more times this year by 25 basis points.

Analysts were previously expecting the Fed to hike two more times (March and May), however, persistently high inflation and labor market strength prompted them to a 25bp rate hike in June. The investment bank now expects the funds rate to peak at 5.25-5.5%.

The market currently prices in a terminal rate of 5.3% by July.

“In light of the stronger growth and firmer inflation news, we are adding another 25bp rate hike to our Fed forecast,” analysts wrote in a client note.

Based on the most recent and data, Goldman’s analysts project the rose 0.55% in January, corresponding to a year-over-year rate of +4.50%.

Unlike Goldman, UBS analysts still expect two more rate hikes by 0.25%.

“After that, we expect the FOMC (Federal Open Market Committee) to turn around and begin to cut interest rates at the September FOMC meeting,” UBS analysts wrote in a client note.

In a recent poll conducted by Reuters, a majority of economists said they expect the Fed to raise rates at least twice in the coming months.

Source link