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Goldman Sachs sees Fed rates peaking at 5% in March - Bloomberg News

Published 10/30/2022, 04:04 AM
Updated 10/30/2022, 04:05 AM
© Reuters. FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File Photo

(Reuters) - Goldman Sachs Group Inc (NYSE:GS)'s economists said the U.S. Federal Reserve could bump up interest rates to as high as 5% by March 2023, 25 basis points above its earlier predictions, Bloomberg News reported on Sunday.

Goldman Sachs Chief Executive Officer David Solomon last week said the U.S. Federal Reserve could hike rates beyond 4.5-4.75% if it does not see "real changes in behaviour."

Federal Reserve's next meeting could shed light on how long it will stick to the aggressive monetary policies.

Goldman's economists added that the journey to 5% hike includes increases of 75 basis points this week, 50 basis points in December and 25 basis points in February and March, the report added.

The report said Goldman cited three reasons for expecting the Fed to hike beyond February -an "uncomfortably high" inflation, the need to cool the economy as fiscal tightening ends and price-adjusted incomes climb, and avoiding a premature easing of financial conditions.

Goldman Sachs did not immediately respond to a Reuters' request for comment.

The central bank is expected to raise rates by 75 basis points for a fourth straight time at the conclusion of its next policy meeting on Nov. 1-2.

Betting on a less hawkish Fed has been a dangerous undertaking this year. Stocks have repeatedly rebounded from lows on expectations of a so-called Fed pivot, only to be crushed anew by fresh evidence of persistent inflation or a central bank bent on maintaining its pace of rate increases.

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Latest comments

Good
No pivot soon
You can't fight stubborn inflation by incremental increases in interest rate. Sooner or later the FED will not be able to deny that. THERE IS NO SUCH THING CALLED SOFTLANDING.
It's clear inflation is stagnant and unemployment rates aren't even affected by rate hikes and in fact are going the opposite direction, allowing Feds to increase rates for even longer and more aggressively. I fully expect 6% minimum by mid 2023. Depending on how Xi and Putin plays their cards, I would not be surprised to see double digits by mid 2024.
how about 8% at the start of summer and 12% at the end of 2023..... 10 years of QE doesnt get washed away in 1 year with 5% interest
zzehcyhf
Are Mary Daly's comments to try to help mid-term elections working?   Seems they have helped drive up the stocks while everyone knows there is no slowing Fed hikes down given the economic numbers.
Jerome Powell found $0.63 in change in his pocket tonight,  Market futures went up 2% because this was a sign of the Fed would be slowing its rate hikes.  "We know that inflation hasnt budged after all these hikes, but I am just sensing they are ready to start smaller hikes.  This change in his pocket is significant so we are driving up the SP500 to 5000 -  Reddit trader
These forecasts change on a frequent basis. One day Fed pivot. next day hard landing.
High inflation will persist as long as Fed rate is lower than the inflation. Economics 101, ignored intentionally by media.
Your exhibition of economic ignorance is hilarious.
typical 🐻 ..aggressive jump and equally aggressive downfall of the stocks
obviously GS have lot's of short position and they are underwater 🤣🤣🤣🤣🤣🤣🤣🤣🤣🤣
i think they are just saying what we already know,  inflation is persistent, economy continues to be strong despite the hikes so they will keep hiking until it goes negative.
FED are always wrong....They make this inflation and they will push USA into deep recession....But GS is so annoying with his predictions, he would tank 2008 just like j.p Morgan and other Mfuc
negative for market
Thanks captain obvious
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