Amid the reflection of sticky inflation and labour market resilience in recent US data, Goldman Sachs expects the US Federal Reserve to remain hawkish in 2023. The US central bank can raise interest rates three more times this year, said Goldman Sachs.
A report, on Thursday, showed rise in producer prices in January by the biggest margin in seven months. Another report indicated rising employment in the US as there was a fall in the number of claims filed by Americans for unemployment benefits last week.
“In light of the stronger growth and firmer inflation news, we are adding a 25bp (basis points) rate hike in June to our Fed forecast, for a peak funds rate of 5.25-5.5%,” economists led by Jan Hatzius said in a note dated Thursday.
In addition to that, the money markets are currently pricing in a terminal rate of 5.3% by July.
Apart from Goldman Sachs, there are several other economists who believe that the US Fed would raise rates at least twice more in the coming months, according to Reuters’ economists poll. In addition to this, none of the economists expected a rate cut in 2023.
