Goldman Sachs already admits that the Fed will raise interest rates five times in 2022 – Markets

Three, four or even five times. The Fed will almost certainly raise interest rates this year, but the market is divided on how often it will. Goldman Sachs was already among the investment banks anticipating a more accelerated strategy He admitted, in a note issued this Sunday to clients, that he could be more aggressive.

Leading the team of economists at Goldman Sachs Jan Hatzius said in an analysis that Bloomberg has access to continue to anticipate higher interest rates in March, June, September and December, as well as announcing a decline in assets on the balance sheet in July. But he stressed that inflation pressures – which reached 7% in December – mean that “there are risks with respect to our base scenario” and therefore there is a possibility for “those responsible to act in all meetings until the inflation scenario. changes”.

“There is a possibility of an additional rate hike or an earlier announcement of a balance sheet cut in May, or even more than four rate increases this year,” says a note from Goldman Sachs, citing the agency. “We can imagine a number of potential factors that could lead to a change in interest rates.”

The group of policymakers led by Jerome Powell is this week for the first time in 2022, and no change is yet expected in interest rates, which are currently at historical lows in the 0%-0.25% range. Market consensus is that the first rally (from 50 basis points to a range between 0.5% and 0.75%) will be announced in March.

At the last monetary policy meeting held on 14-15 December,The Fed has indicated the possibility of raising interest rates three times this year and three more next year. As for debt purchases, it has announced that it will double the pace of the gradual withdrawal of stimulus (“taper”).

As part of the stimulus to the economy during the pandemic, the Fed began disbursing billions of dollars in asset purchases, which in the meantime fell to 120 billion dollars per month. In November and December 2021 it stopped investing $30 billion in these purchases ($15 billion each month), so the asset purchase pace it entered into in 2022 was at the base of $90 billion per month. $1 billion in Treasuries (OT) and $30 billion in mortgage-backed securities.

With the rate of decrement doubled, the monthly depreciation increased to 30 billion. This reduction was divided by 20 billion in the case of OTs and 10 billion in the case of mortgage-backed securities. So the Fed was buying just $40 billion a month in the OT and $20 billion in mortgage-backed securities.