Goldman Sachs predicts five rate hikes by the US central bank in 2022

Goldman Sachs expects the United States Federal Reserve, the country’s central bank, to raise interest rates in the country five times in 2022, up from four previously forecast hikes, with an increase expected as early as March.

The company’s projection was released late on Friday afternoon (28).

Economists rushed to update their forecasts for the U.S. rate hike after the Fed said on Wednesday it was likely to raise in March and reaffirmed plans to end its bond purchases that month, in which the president Fed leader Jerome Powell promised to be a sustained battle to tame inflation.

At the conclusion of Wednesday’s meeting, Powell said a decision would be made in the coming months on when to start reducing the supply of government bonds and mortgage-backed securities.

Goldman Sachs economists David Mericle and Jan Hatzius said in the note that they expect the Fed to raise rates in March and May and announce the start of its balance sheet reduction in June, then follow up with hikes in July and September. Thereafter, they expect the Fed to return to a quarterly pace in the fourth quarter, with a rise in December to end the year at 1.25-1.5%.

They said they had revised their expected inflation path following this week’s data. Furthermore, “President Powell’s comments earlier this week made it clear that the Fed’s leadership is open to a more aggressive pace of tightening.”

Goldman said it continues to expect three hikes in 2023 and for the Fed to hit the same 2.5-2.75% terminal rate in 2024. In early January, Goldman said it expected four hikes this year and that the reduction started as early as July.