Some Wall Street banks expect four rate hikes from the Fed this year

Goldman Sachs expects the Federal Reserve (Fed) to raise the interest rate four times this year and begin the process of reducing its balance sheet starting in July, joining other large banks in anticipating an aggressive tightening of US monetary policy. .

The Wall Street bank previously estimated that the Fed would raise rates in March, June and September, but now expects another rise in credit costs in December.

The rate forecast by Goldman Sachs is only modestly above market expectations for 2022, “but the gap grows significantly for the following years,” wrote the bank’s chief economist, Jan Hatzius, in a note.

Fed officials said last month that the US labor market was “very tight” and that it might be necessary to raise rates earlier than expected, but also mentioned that it could reduce its overall asset holdings at a faster pace, from according to the minutes of his last monetary policy meeting last week.

This prompted traders to incorporate a roughly 80% probability of an interest rate hike from the Fed in March.

JPMorgan advanced its forecast for the first rate hike since the start of the pandemic to March on Friday, from the previous estimate that pointed to June, and now expects increases for each quarter this year.

“We believe that the Federal Reserve authorities are coming to the same conclusion that the labor market is very tight, making it difficult to implement the first rate hike in June, as our previous forecast indicates,” the economist wrote. head of the bank, Michael Feroli, in a note sent to clients.