Goldman Sachs Advances the Timing of The First Interest Rate Hike After the U.S. Epidemic by One Year to July 2022

Goldman Sachs advanced its forecast for the time of the first interest rate hike since the COVID-19 pandemic in the United States by one year to July 2022, as the bank expects the inflation rate to remain high.

Goldman Sachs chief economic analyst Jan Hatzius wrote in a client report: “The main reason we changed our rate hike expectations is that we now expect core personal consumption expenditures (PCE) when the curtailment stimulus ends. The price index rise will remain above 3%-the core consumer price index (CPI) rise will remain above 4%.”

The Federal Reserve Board (Federal Reserve/FED) will end its two-day policy meeting on Wednesday and is expected to announce the start of a plan to reduce monthly debt purchases.

“If there is a big unexpected development in the epidemic, inflation, salary growth or inflation expectations, it may prompt us to correct, but we believe that the threshold for both upward and downward adjustment is very high,” Hazhesi said.

Goldman Sachs also expects to raise interest rates for the second time in November 2022, and raise interest rates twice a year thereafter.

After the release of last Friday’s inflation data, Fed Funds futures have fully reflected that they will rise by 0.25% by July 2022 and will raise interest rates again by December.

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