Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Goldman moves up forecast for U.S. rate hike but not fully convinced

06/17/2021 | 12:29pm EDT
FILE PHOTO: The Goldman Sachs company logo is seen in the company's space on the floor of the NYSE in New York

(Reuters) - Goldman Sachs has adjusted its forecast for the timing of the first post-pandemic interest rate hike by the U.S. Federal Reserve to 2023, in line with the latest projection by central bank policymakers.

However, Goldman, in a daily briefing late on Wednesday, said chances the Fed will hike rates by the end of 2023 are "only modestly better than 50% because a liftoff could easily be derailed by lower-than-expected inflation or a sharper deceleration in growth as fiscal support fades."

The investment bank said it revised its forecast for an initial rate increase to 2023's third quarter from a previously forecast first quarter of 2024, citing the Fed's lower inflation bar for hiking rates.

On Wednesday, a majority of Fed policymakers moved up projections for commencing interest rate hikes from 2024 to 2023, with two quarter-point interest rate increases projected that year. At the same time, the median projection for core personal consumption expenditure (PCE) inflation was steady at 2.1% in 2023.

Goldman Sachs said the Fed "appears to be more firmly focused on the backward-looking average level of inflation this cycle than we expected" and that has implications for future interest rate policy decisions.

"First, the liftoff threshold appears to be modestly lower than we previously thought, though the FOMC (Federal Open Market Committee) did maintain the liftoff requirement that inflation must be 'on track to moderately exceed 2% for some time,' which presumably implies that some buffer above 2% is still needed," the briefing said.

"Second, the median projection of two hikes with core PCE at just 2.1% suggests to us that most of the FOMC would support proceeding steadily with normalization after the liftoff goals are met even if inflation is only running a bit above 2%," it added.

(Reporting By Karen Pierog; Editing by Alden Bentley and David Gregorio)

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.38% 0.7369 Delayed Quote.-4.60%
BRITISH POUND / US DOLLAR (GBP/USD) 0.01% 1.38966 Delayed Quote.1.70%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.17% 0.80032 Delayed Quote.2.11%
EURO / US DOLLAR (EUR/USD) 0.14% 1.18814 Delayed Quote.-2.84%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.00% 0.013452 Delayed Quote.-1.75%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.04% 0.69781 Delayed Quote.-2.86%
THE GOLDMAN SACHS GROUP, INC. 1.83% 381.8798 Delayed Quote.42.16%
Latest news "Economy & Forex"
11:33aReese Witherspoon's media firm to be sold to Blackstone-backed company
11:31aReese Witherspoon's media firm to be sold to Blackstone-backed company
11:26aU.S. Senate pushes ahead with $1 trillion bipartisan infrastructure bill
11:26aPelosi presses White House to reinstate COVID-19 eviction moratorium
11:22aU.S. says Abbott units to pay $160 million to resolve alleged false Medicare claims
11:04aSouth Africa's MTN flags up to 15% fall in first-half profit
11:01aFERRARI N : sticks to 2021 targets after strong Q2
11:00aWM MORRISON SUPERMARKETS : Morrisons shares at eight-year high ahead of expected bid battle
10:59aSub-zero yields on over half of euro investment-grade company debt-Tradeweb
10:55aTwitter's Dorsey leads $29 billion buyout of lending pioneer Afterpay
Latest news "Economy & Forex"