Categories: Markets

The Fed will apply increases of 25 basis points in March and May to reach a maximum rate of 5.00-5.25% – Goldman Sachs

The Fed will apply increases of 25 basis points in March and May to reach a maximum rate of 5.00-5.25% – Goldman Sachs

The research team of Goldman Sachs indicates in his latest publication that he expects the US Federal Reserve to (Fed) raise interest rates by 25 basis points (bp) in March and May.

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“In the US, we expect GDP growth to slow to 1.4% in 2023, reflecting negative momentum from tightening financial conditions. We see a below-consensus 35% probability of entering a recession over the next due to the continued rebalancing of the labor market and less carryover from fiscal and monetary policy adjustment.”

“We expect the Fed to hike 25 bps in March and May to get to a top funds rate of 5.00-5.25%. On the fiscal policy front, the additional funds in the spending bill for the fiscal year 2023 present upside risks to our assumption of roughly flat real federal spending growth in 2023.”

Source: Fx Street