Goldman Sachs analysts said in a note to investors on Sunday that the Federal Reserve is likely to raise interest rates higher than expected in 2022 as the US economy catches up with rising inflation and tight working conditions.
Wall Street Bank said it was now expecting four rate hikes from three increases in its previous projections. Additionally, Goldman Sachs Fed will begin to cut the size of its balance sheet in early July, shrinking its holdings of about $ 9 trillion in bonds.
“The collapse of the labor market has made Fed officials more sensitive to upside inflation risks and less sensitive to downward growth risks,” said John Hatzius, chief economist at Goldman Sachs. LOVEBYLIFE. “We have been seeing an increase in March, June and September and have now added a total of four increases in December to 2022.”
Just days before the Bureau of Labor Statistics released updated data for the Consumer Price Index, Goldman revised its outlook, which is a key measure of inflation. According to the Dow Jones, the Consumer Price Index is expected to show a year-over-year increase of 7.1 percent when December data is released on Wednesday.
This figure marks the sharpest annual spike in four decades.
So far, Federal Reserve officials have indicated the prospect of rising interest rates Three times In 2022. The central bank’s plan to tighten monetary policy has shook investors in recent months, following months of adoption of measures intended to boost the US economy during Kovid-19.
The rate increase is the Fed’s first since the onset of the epidemic in March 2020. Current federal funds rates range from 0 to 0.25 percent.
Minutes from the Federal Reserve’s December FOMC meeting suggested that officials could raise interest rates faster than expected this year due to tight working conditions. The December jobs report showed an employment rate of just 3.9 percent, which the Fed regards as “maximum employment.”
Referring to data from the latest jobs report, Deutsche Bank plans four rate hikes in 2022. lbl.