- Goldman, BofA predicts three Fed rate hikes this year
- Both banks forecast Fed interest rates in the 5.25% to 5.5% range
- European bank UBS sees rate hikes in March and May meetings
February 17 (Portal) – Goldman Sachs and Bank of America said they expect the US Federal Reserve to hike interest rates three more times this year, raising their estimates after data pointed to persistent inflation and a resilient labor market indicated.
Producer prices rose by the widest range in seven months in January, according to data on Thursday, while a Labor Department report showed the number of Americans filing new jobless claims fell unexpectedly last week.
“Given stronger growth and firmer inflation news, we’re adding a 25 basis point (basis point) rate hike to our Fed forecast in June, translating to a top rate of 5.25% to 5.5%,” Goldman Sachs economists said at the management of Jan Hatzius says in a note from Thursday.
Meanwhile, money markets are currently pricing in a final rate of 5.3% through July.
BofA Global Research also expects a 25 basis point hike at the Fed’s June meeting, taking the final rate to a range of 5.25% to 5.5%.
last update
Watch 2 more stories
It previously announced two rate hikes of 25 basis points each at the March and May meetings.
“Resurgent inflation and solid job gains mean the risks to this (just two rate hikes) outlook are too lopsided for our liking,” BofA wrote in a note to clients.
Following the latest US data, European investment bank UBS said it expects the Fed to hike rates by 25 basis points at its March and May meetings, which could keep the Fed’s policy rate in the 5% to 5.25% range .
In sharp contrast to its US peers, however, UBS estimated the Fed would ease rates at the September meeting this year.
Ahead of the latest US data, JP Morgan had forecast the terminal rate at 5.1% by the end of June.
A majority of economists polled by Portal ahead of the latest data said they expected the Fed to hike rates at least twice more in the coming months, with the risk of them getting higher. None of them expect a rate cut this year.
Reporting by Aniruddha Ghosh and Siddarth S in Bengaluru; Edited by Savio D’Souza, Anil D’Silva and Devika Syamnath
Our standards: The Trust Principles.