© Reuters. FILE PHOTO: The Goldman Sachs logo is displayed in a post above the floor of the New York Stock Exchange, September 11, 2013. REUTERS/Lucas Jackson/File Photo
SINGAPORE (Reuters) – Goldman Sachs (NYSE:), Barclays (LON 🙂 and a host of investment banks raised their estimates for the US policy rate on Thursday, after the Federal Reserve raised 75 basis points and hawkish messages today.” before.
“The FOMC (Federal Open Market Committee) stands ready to accept further labor market downturns if necessary if inflation remains high,” Goldman said in its note.
Goldman analysts also said they had expected a nod to a slower pace of tightening in November and are adjusting their forecast for a rate hike to 75 basis points (bps) in November, 50 bps in December and 25 bps in February, to peak. fund rate 4.5-4.75%, compared with 4-4.25% before.
Fed Chairman Jerome Powell announced on Wednesday that he and his fellow policymakers will “hold firm” in their fight to beat inflation, along with a slew of new forecasts showing interest rates Policy will increase at a faster rate and at a higher rate than expected, the economy is slowing, and unemployment is rising at a historically related rate to the recession.
The projections signal another 1.25 percentage point rate hike later in the year in the federal funds rate, currently within the 3.00-3.25% target range.
“The Committee is strongly committed to bringing inflation back to the 2% target,” the central bank’s rate-fixing FOMC said in its policy statement after concluding its two-day policy meeting.
Goldman said the Fed’s dotted chart also shows an average total of 175 bps of rate cuts in 2024 and 2025, but it “wouldn’t take it seriously”.
“In our view, if a rate hike solves the inflation problem without a recession, the FOMC will most likely wait until something happens to cut rather than just cut it.” for the sake of returning to neutrality.”
Analysts at Barclays Research revised their call for the fund rate to a 75bps increase in November from 50 previously and another 50bps increase in December from the previous forecast of 50bps. 25 bps.
“This would bring the year-end feeding fund target range to 4.25-4.50%,” they wrote.
Barclays expects another 25bps rate hike at its February 2023 meeting, pushing its target range to a cycle top of 4.50-4.75%, but cutting rates later next year 2023.
Societe Generale (OTC:) economists predict similar increases of 75 bps in November and 50 bps in December.
“We forecast a mild recession in early 2024. The FOMC move raises confidence and risks that a recession could occur sooner,” they said.