Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

Expected Fed rate hike next week 'the last of the cycle,' Goldman Sachs says

Published Jul 21, 2023 06:57AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters

Investing.com -- The Federal Reserve's widely-expected interest rate hike at its upcoming policy meeting next week will be "the last" of the U.S. central bank's long-running tightening cycle, according to analysts at Goldman Sachs.

In a note to clients, the Goldman analysts said that the rate-setting Federal Open Market Committee will likely raise borrowing costs to a range of 5.25% to 5.5% on Wednesday.

But they said: "The key question is how strongly [Fed] Chair [Jerome] Powell will nod toward the 'careful pace' of tightening he advocated in June, which we and others have taken to imply an every-other-meeting approach."

Fed policymakers are currently facing a mixed economic picture. Inflation -- the central driver of the Fed's unprecedented recent run of rate rises -- slowed sharply in June, which the Goldman analysts said could prove to be "a turning point" in the bank's battle to corral elevated price growth. However, activity data has also shown that demand growth ran above potential in the first half of 2023, while financial conditions eased.

Taking these trends into account, the Goldman analysts said they believe the Fed will ultimately choose to "remain more hawkish than market pricing."

"This reflects both our lower probability of recession and our expectations that the threshold for rate cuts will be fairly high and that cuts will be gradual," they noted.

They added that they expect the Fed to begin slashing rates by 25 basis points per quarter starting from the second quarter of 2024, eventually bringing the closely-watched Fed Funds rate down to between 3% to 3.25%.

Expected Fed rate hike next week 'the last of the cycle,' Goldman Sachs says
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
Richie Berg
Richie Berg Jul 23, 2023 6:28PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
If this week rate rise is the last, then the market will bottom out. The market bottoms out after the last rate hike.
GoTslaGO Tsla
Joetsla Jul 22, 2023 3:49PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I spent almost double goinig to WM buying food , all number are fake , inflation exisit !!!
Derick Lim
Derick Lim Jul 21, 2023 8:12AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Can Goldman Sachs expect when Goldman Sachs will beat earnings forecast and start making profit since Goldman Sachs can predict Fed decision ......or it is a just Goldman Sachs fortune teller prediction?
dar dar
dar dar Jul 21, 2023 7:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
welcome to the circus!
Chih Pin Wu
Chih Pin Wu Jul 21, 2023 7:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
If inflation is no longer rising, have prices dropped? So real purchases are lower.
Don Stackow
Don Stackow Jul 21, 2023 7:05AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
exactly..wtf...is there going to be some relief in core as well
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email