(Reuters) – The Federal Reserve (Fed) is expected to raise interest rates three times this year, by a quarter point each time, Goldman Sachs expects after data released this week that highlighted the strength of the labor market and inflation.
A U.S. Department of Labor report on Thursday said producer prices rose in January at their fastest pace in seven months, driven by a jump in energy prices, while another showed a decline surprise in jobless claims last week.
“In light of stronger inflation, we are adding a 25 basis point rate hike in June to our Fed forecast, for a final rate of 5.25%-5.5%,” wrote Thursday. in a note the Goldman Sachs economists led by Jan Hatzius.
Money markets are currently pricing in a terminal rate of 5.3% in July.
Swiss bank UBS has also revised its expectations, now expecting the US central bank to hike rates by a quarter point in March and May, which could lift the fed funds rate target. at 5%-5.25%.
“After that, we expect the Fed’s monetary policy committee to backtrack and start cutting rates starting in September,” UBS wrote in a note.
Ahead of recent US data, JPMorgan forecast a federal funds rate target of 5.1% by the end of June and BofA Global Research a terminal rate of 5.0%-5.25% by the end of June. ‘year.
BofA was expecting two rate hikes of 25 basis points each.
The majority of economists polled by Reuters ahead of recent indicators expected the Fed to raise rates at least twice more in the coming months, with no cuts expected this year.
(Aniruddha Ghosh and Siddarth S in Bangalore, Laetitia Volga, editing by Kate Entringer)
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