Goldman Sachs said it forecast seven 25-bp hikes in the US policy rate by the Federal Reserve this year, up from five previously estimated, updating its forecast after Thursday’s US inflation data.
US consumer prices rose 7.5% last month on an annual basis, above economists’ estimates of 7.3% and the biggest annual jump in inflation in 40 years, further adding to pressure on the country’s central bank. to raise interest rates more aggressively.
Ryan Wang, an economist at HSBC, said the bank now expects the Fed to move further than previously anticipated, with a 50-bp hike in March and four additional 25-point hikes in 2022. According to HSBC, that’s will raise interest rates from 0-0.25% to 1.50-1.75%.
“This would equate to 150 basis points in rate hikes this year, versus our previous forecast of three 25-point hikes,” Wang said in a note.
Deutsche Bank said in a daily note to markets that its economists also upped their bet for a 50 basis point hike in March by the Fed, as well as five more 25-point hikes in 2022, with hikes in all but November meetings. , totaling 175 basis points in 2022.
Deutsche economists “also highlight the growing risk of a recession in 2023 or 2024,” according to the note.
US consumer confidence drops to more than 10-year low in February
US consumer confidence fell to its lowest level in more than a decade in early February amid expectations that inflation will continue to rise in the near term, a survey showed on Friday.
The University of Michigan said its preliminary consumer confidence index fell to 61.7 in the first half of this month, the lowest since 2011, from a final reading of 67.2 in January.
Economists polled by Reuters had expected the index to rise to 67.5.
The survey indicator on current economic conditions dropped to 68.5 from 72.0 in January. The index measure for consumer expectations fell to 57.4 from 64.1 in January.
In the survey, the one-year inflation outlook rose to 5.0%, the highest reading since 2008, up from 4.9%, while the five- to 10-year inflation outlook was stable at 3.1%.
On Thursday, the US government reported that consumer prices recorded their biggest annual increase in 40 years in January.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
