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04:00:09 24-01-2022

Goldman Sachs sees risk Fed will tighten more than forecast – Bloomberg

Bloomberg came out with the latest analysis from Goldman Sachs to propel hawkish hopes ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting.

Key quotes (via Bloomberg)

The Goldman Sachs economists led by Jan Hatzius said in a weekend report to clients that they currently expect rates to be increased in March, June, September and December and for the central bank to announce the start of a balance sheet reduction in July.

But they said inflation pressures mean that the ‘risks are tilted somewhat to the upside of our baseline.’

‘We see a risk that the FOMC will want to take some tightening action at every meeting until that picture changes,’ the Goldman Sachs economists said.

This raises the possibility of a hike or an earlier balance sheet announcement in May, and of more than four hikes this year.

The Goldman Sachs economists said if the Fed did decide to be more aggressive, it would likely hike by 25 basis points at consecutive meetings rather than by 50 basis points. 

Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar

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