The Federal Reserve System (FRS) will fulfill at least three more interest rate hikes base this year in the fight to contain sustained inflation, according to analysts at Goldman Sachs and Bank of America.
The two largest US banks believe that macroeconomic indicators show that lInflation control conditions are not necessary convince the Fed to stop raising interest rates.
Goldman Sachs and Bank of America forecasts suggest that inflation will remain highAt least until the end of the year.
On February 14, the Bureau of Labor Statistics released its first 2023 Consumer Price Index (CPI) report, which showed that January inflation was 6.4% year-on-year.
However, inflation increased by 0.1% to 0.5% m/m compared to the price increase in December 2022.
Analysts believe that although annual inflation tied my seventh month downconsumer prices remain consistently high, sending mixed signals to the Fed that it should stick to its strategy to cool the economy.
But the inflation report is not everything, as analysts from both banks they also see a stable market on the Fed’s attack, with a 3.4% unemployment rate in January, the lowest data in decades.
The same week, a Department of Labor report showed thatThe number of applications for unemployment benefits fell since December last year, which analysts did not expect.
Fed won’t stop rate adjustment
“In light of news of stronger growth and more robust inflation, we are adding a 25 basis point rate hike in June to our Fed forecast. for the maximum cash rate from 5.25% to 5.5%Economists at Goldman Sachs, led by Jan Hatzius, noted in a note this week.
For their part, the money markets have calculated that the Fed’s cap rate will be at 5.3% as of July last year.
While Bank of America Global Research has calculated that Fed rises above 25 basis points at their June meeting, taking rates ranging from 5.25% to 5.50%.
“The resumption of inflation and strong job growth mean that the risks to this outlook (just two interest rate hikes) are too one-sided in our view,” Bank of America wrote in a note to one of its clients.
The next Fed meeting is scheduled for March, and the next one for May next year.
Source: La Opinion
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