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Goldman Sachs expecting five rate hikes this year

Published 01/29/2022, 09:59 AM
Updated 01/29/2022, 10:00 AM
© Reuters. FILE PHOTO: The Federal Reserve building in Washington September 1, 2015. . REUTERS/Kevin Lamarque/File Photo

NEW YORK (Reuters) - Goldman Sachs (NYSE:GS) is forecasting that the U.S. Federal Reserve will raise interest rates five times in 2022, versus four previously, with a hike expected in March, according to a note from its economists late on Friday.

Economists have scrambled to update rate hike expectations since the Fed on Wednesday said it was likely to hike interest rates in March and reaffirmed plans to end its bond purchases that month in what Fed Chairman Jerome Powell pledged will be a sustained battle to tame inflation.

At the conclusion of Wednesday’s meeting, Powell said a decision would be made in coming months on when to start shrinking the central bank's government bonds and mortgage-backed securities.

Goldman economists David Mericle and Jan Hatzius said in the note they expect the Fed to hike rates in March and May and announce the start of its balance sheet reduction in June, then follow with hikes in July and September. They subsequently expect the Fed to return to a quarterly pace in the fourth quarter with one hike in December to end the year at 1.25-1.5%.

The economists said they had revised up their inflation path expectation following data this week while in addition, "Chair Powell’s comments earlier this week made it clear that the Fed leadership is open to a more aggressive pace of tightening."

Goldman said it continues to expect three hikes in 2023 and for the Fed to reach the same terminal rate of 2.5-2.75% in 2024.

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Earlier in January, Goldman said it expected four hikes this year and for the process of balance sheet reduction to start as soon as July.

Latest comments

down side
down side
Would be funny to see if both inflation and interest rates will rise together like in 2003-2006 during which period the S&P 500 rose by more than 33%.
that's funny?
they won't do a thing
you must be extremely naive or not been listening. rates are definitely going up most likely beginning in march
Sell the rumors, buy the news
The US Federal reserve is solely responsible for the Ukraine situation. The US Fed may have to slam the break really hard to avoid the Ukraine invasion and to send Russian troops and US stocks back to their home bases
hmm..u my friend need help
Yes; they want.a quick market crash .; a shallow recession and by Christmas lowering of rates again. My projection, a crash of another 15%  and lucky if it stops there. 👍
It is time to raise the interest rate from 1% to 3% by the end of the year. Otherwise there is a danger that the bubble will become uncontrollable.
inflation 8% interest 1.5% loss due to the depreciation of the dollar 6.5% so people are getting poorer.
if inflation is still @3% fed will not wait 2024 to normalize and shoud get in positive real rates : meaning 3% as soon as 2023
Goldman - making money either way - short stocks, just spread some news, market drops, buy to cover. Buy stocks at lowest prices, give rosy picture, sell stock at higher price. Rinse and repeat
If they don't crash the market asap, midterms will be completely lost over inflation. The common person cares nothing about stonkers but hates inflation.
 Biden approval is at 41% and he has already lost a LOT of independent voters for Democrats. I VERY VERY much doubt they will be able to say - yes your gas prices have doubled, your rent has gone up by 30% and you cant feed your kids as fresh food prices have risen by 20%...but heyyyyyy the stock market is near record highs so lets party ;) hahaha
 Yes but would you rather buy shares right now - or a loaf of bread to feed your family as food prices are rising monthly?? Fact is - and Powell gave these hints - that they are happy to lower economic activity and growth so becomes more sustainable long term even if means short term impact. Unemployment at 3.9% with 11 million open jobs,  inflation at 40-year highs, Corporate Debt at the highest level versus GDP EVER, National Debt at WW2 levels, and money supply at the highest level ever..... all, while interest rates are at 0% and the debt bubble climbs, is NOT Sustainable. Sooner or later something will break. Will it be the economy or the stock market? Plus if it is the economy first - it will drag the stock market down with it.
 Yes but you can only put extra income above your cost of living into shares. If your cost of living / rent rises - chances are you will invest less / you will prioritise food or gas over getting a brand new iPhone every year and tell yourself you will get it every 2nd year instead. This lowers consumer confidence = lower company profits = lower share prices. It's the way the world works...not let's invest as I like investing..
they will never do it
Jamie Dimon of JP Morgan is now predicting up to 7 rises of 0.25% each in 2022 to try and get inflation under control (so Fed Rate hitting 1.75% - 2% by the end of 2022 instead of 2023).
gold here to get the market to drop so it can buy, they need to be prosecuted
Buy chinese equities the USA is failing
 Emm most Chinese dont even know about the Tiananmen Square Massacre until they leave the country. Propaganda on both sides. Anyone says anything against the Chinese government and you have 100 million Chinese all crying on Weibo - demanding a boycott or trade war. Nationalist sentiment and xenophobia is constantly being whipped up in the country....
 How do you work that one out since they are still after a zero covid policy?? They also have a massive property debt problem with so many companies defaulting
 Yes but does that not mean could have already missed out and bought in at peak? Indian unemployment at 8% is its highest in 20 years and rising. Like a lot of countries can potentially see a global recession in the next 12 - 18 months in a hard bounce off massive global stimulus.
Goldman sachs is wrong
This news for Bears...Thank you Goldman..you not Goldman you are Dimondman
Amen
now we know they are heavy in index sell positions and long in tNotes
They must all be so - as JP Morgan and BoA have also both said they could see 6-7 rate increases in 2022 now (versus 2-3 late last year). Inflation is becoming entrenched via high energy prices and wage increase demands due to a very tight labor market (so it becomes a cycle - high inflation breeds high inflation once it gets entrenched).
"Forecasting" and "expecting". Lets see what really happens this year. I expect a false flag even to occur within the next month or so to negate any rate hikes. Even the slightest increase will destroy markets
that's exactly what they will do. Something will come along.
 Nope the market has factored in the possibility of rate hikes this year but with Powell wanting to protect his own wealth he has been VERY VERY careful to constantly say discussions are ongoing and rate hikes are a good possibility (but will be reviewed up to March). As they say, actions speak far louder than words so the market will only fully accept rate hikes are happening once they start kicking in. Plus if 3 hikes are factored in - JP Morgan, BoA and Credit Suisse are all now saying 6-7 could be on the cards?????????
 Priced in??? what the heck does that really mean?? That the FED just pumps $ into the market whenever it goes down...because that's what's been keeping markets afloat for the past 10 years. These are fake markets so you need to re4sess your logic
agree with New Jazenevd also the tensions between Russia and Ukraine. China still, New strands of Covid. Powell has said the market does not dictate rates the people of the USA do. Our country is playing catch up. Also most investors do not remeber inflation, they just buy the dip. That's great... I am one to buy cheap sell high stocks are still crazy evaluations.
So just 2-3 weeks ago they were throwing around buy ratings, and now all of a sudden they are the most bearish there is? What a joke.
Yeah, they’re too busy shorting the precious metals markets.
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