Goldman Sachs: Due to pressure from the banking system, the Federal Reserve is not expected to raise interest rates this week

According to reports, Goldman Sachs economists wrote in a report on Monday that given the pressure on the banking system, we expect the Federal Open Market Committee to suspend interest rate hikes at its meeting in March this week. Although policymakers have actively responded to the crisis to support the financial system, the market does not seem to fully believe that measures to support small and medium-sized banks are sufficient to cope with the crisis. Although not raising interest rates temporarily means suspending the fight against inflation, in fact, the issue of inflation now seems less urgent than last summer, as inflation expectations have fallen sharply recently and long-term inflation expectations have remained stable.

Interpretation of this information:

Goldman Sachs economists have predicted that the Federal Open Market Committee (FOMC) will suspend interest rate hikes in its upcoming meeting in March due to the pressure on the banking system. Policymakers have responded actively to support the financial system. However, the market appears to lack confidence in the measures taken to support small and medium-sized banks to cope with the crisis. The suspension of interest rate hikes might mean a pause in the fight against inflation, but the severity of the inflation issue has decreased as inflation expectations have fallen sharply recently, and long-term inflation expectations have remained stable.

The message highlights the economic state of the banking system, which is currently facing significant pressure due to the current crisis. The suspension of interest rate hikes reflects the Federal Reserve’s efforts to support banks to cope with the crisis. Furthermore, the market’s lack of confidence in the measures taken to help small and medium-sized banks indicates the level of uncertainty surrounding the economic situation, and the economy’s ability to recover.

The issue of inflation has been a significant point of concern in the past; however, recent inflation expectations show a significant decrease in concern. This reflects the shift in economic focus from solely fighting inflation to protecting banks and small and medium-sized enterprises (SMEs) from the current crisis.

The three keywords that summarize the content are:
1. Interest rates
2. Inflation
3. Banking system pressure.