According to economists at Goldman Sachs Group Inc., interest rates in the United States could rise to 5% by March 2023, which would be a 25 basis point increase from earlier forecasts.
David Solomon, the CEO of Goldman Sachs, stated last week that the U.S. Federal Reserve may raise rates above 4.5-4.75% if it does not observe “real changes in behavior.”
How long the Federal Reserve will continue to pursue its aggressive monetary policies may be revealed at its upcoming meeting.
According to Goldman’s economists, the path to a 5% increase entails increases of 75 basis points this week, 50 basis points in December, and 25 basis points in February and March.
According to the report, Goldman cited three factors as justification for expecting the Fed to raise rates after February: “uncomfortably high” inflation, the need to cool the economy as fiscal tightening ends and incomes increase after adjusting for inflation, and avoiding an early easing of financial conditions.
Following its upcoming policy meeting on November 1-2, the central bank is anticipated to increase rates by 75 basis points for a fourth consecutive time.
This year, it has been risky to wager on a Fed that is less hawkish. Stocks have repeatedly recovered from lows amid expectations of a “Fed pivot,” only to be destroyed again by new indications of persistent inflation or a central bank determined to keep up its rate-hike pace.
(Adapted from Economictimes.com)