Goldman Sachs: The Federal Reserve is expected to raise interest rates three times by 25 basis points in March, May and June

According to reports, Goldman Sachs: It is expected that the Federal Reserve will raise interest rates three times by 25 basis points in March, May and June 2023, and the peak of the federal funds rate will reach 5.25-5.5%.

Interpretation of this information:

Goldman Sachs, one of the world’s leading investment banks, has announced its prediction that the Federal Reserve will raise interest rates by 25 basis points three times in 2023. This forecast sets the timeline for rate hikes in March, May and June next year, as policymakers try to maintain a balance between economic growth and stability. The decision was made based on the following reasons.

Inflation risk is the primary factor for the rate increase. The US economy is recovering well after the pandemic, with strong demand and limited supply causing prices to rise. In order to prevent inflation from eroding asset value and increasing risk, the Federal Reserve may have to act by raising interest rates. According to Reuters, inflation in the United States rose 5% in May 2021, the highest rate since 2008.

Another reason is the potential threat from the emerging Delta variant of the COVID-19 virus. Although vaccination rates in the United States have been increasing, there is concern that the new variant may cause another wave of the pandemic that could greatly impact the economy. To prepare for the worst-case scenario, the Federal Reserve may need to raise interest rates to reduce the potential damage.

Goldman Sachs predicts that the peak of the federal funds rate will reach 5.25-5.5%, which is much higher than the current rate of 0-0.25%. This estimation is based on the historical policy response of the Federal Reserve to inflation, which is typically a rate hike of at least 25 basis points. However, this projection is subject to change based on future economic performance and policy changes.

To summarize, Goldman Sachs has predicted that the Federal Reserve will raise interest rates three times in 2023, with rates increasing by 25 basis points each time. This prediction is based on factors such as inflation risk and the potential impact of the Delta variant on the economy. The peak of the federal funds rate is expected to reach 5.25-5.5%. The three keywords of this message are “interest rates,” “inflation,” and “Delta variant.”