Goldman Sachs Now Expects 5 Rate Hikes From The Fed In 2022

Goldman Sachs Group Inc’s GS economists led by Jan Hatzius have predicted that the Federal Reserve will raise interest rates by 25 basis points five times this year, rather than the four rate hikes previously prognosticated.

That would take the benchmark to 1.25%-1.5% by the end of the year.

On Wednesday, the Fed said it was likely to hike interest rates in March and reaffirmed plans to end its bond purchases. 

Fed Chairman Jerome Powell also said that a decision would be made in the coming months on when to start shrinking the central bank's government bonds and mortgage-backed securities.

Economists at Goldman have said that they expect the Fed to hike rates in March and May and announce the start of its balance sheet reduction in June. That would be followed by hikes in July and September.
Goldman said it continues to expect three hikes in 2023 and for the Fed to reach the same terminal rate of 2.5-2.75% in 2024.

Earlier in January, Goldman said it expected four hikes this year and for the process of balance sheet reduction to start as soon as July. 

Bank of America Corp. BAC predicts seven rate hikes in 2022 and BNP Paribas SA BNPQY forecasts six rate hikes. 

However, JPMorgan Chase & Co. JPM and Deutsche Bank AG DB see five.

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Photo: Courtesy Rafael Saldaña on Flickr