Veteran strategists at Goldman Sachs have shared their forecasts regarding the Federal Reserve’s actions in the upcoming period.
Goldman Sachs strategists, in a recent report, made predictions about the actions of the US Federal Reserve. They suggested that it’s unlikely for the Fed to raise interest rates during the meeting scheduled between October 31 and November 1.
Additionally, these strategists anticipate that the Fed will increase its economic growth projections during the upcoming policy meeting next week.
The report indicates that as the job market continues to stabilize, along with positive developments in inflation and anticipated growth in the fourth quarter, more people may believe that the Federal Open Market Committee (FOMC) won’t raise interest rates again this year.
However, Goldman Sachs strategists anticipate that a slim majority of 9 out of 10 members on the Fed’s dot plot, which represents policymakers’ interest rate forecasts, may suggest that the Fed intends to proceed with another rate hike, at least for the time being, to maintain flexibility.
Fed Expected to Maintain Rates in September Meeting
Futures tied to the Federal Reserve’s benchmark interest rate indicate a 98% likelihood that the Fed will keep rates unchanged at its meeting on September 19-20. The current policy rate falls in the range of 5.25%-5.50%. Additionally, there is about a 72% probability that rates will remain unchanged at the October 31-November 1 meeting.
Potential Interest Rate Cuts Next Year
Goldman Sachs strategists suggest that if inflation continues to cool, we might see gradual interest rate cuts in the coming year. They anticipate that the Fed could raise its 2023 U.S. growth forecasts from 1% to 2.1%, reflecting the economy’s resilience.
Furthermore, they expect the Fed to reduce its 2023 unemployment rate forecast by 0.2 percentage points to 3.9% and lower its core inflation forecast by 0.4 percentage points to 3.5%. These projections will be updated during the Fed’s upcoming economic projections.
Important:Ā Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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