Recent US data have shown sticky inflation and a resilient labour market, and Goldman Sachs anticipates the US Federal Reserve to maintain its hawkish stance in 2023. According to Goldman Sachs, the US Federal Reserve can increase interest rates three more times this year. According to a survey released on Thursday, producer prices increased in January by the most amount in seven months. According to another data, the number of Americans who applied for unemployment benefits dropped last week, indicating that employment in the US is increasing. In a note dated Thursday, analysts led by Jan Hatzius stated, “In light of the higher GDP and firmer inflation news, we are adding a 25bp (basis points) rate hike in June, for a peak funds rate of 5.25-5.5%.”
Additionally, a terminal rate of 5.3% by July is now factored into the money markets.
According to Reuters’ poll of economists, a number of other economists, besides Goldman Sachs, think that the US Fed will increase interest rates at least twice more in the near future. Furthermore, none of the analysts anticipated a rate reduction in 2023. J.P. Morgan had predicted a funds rate of 5.1% by the end of June before the release of recent US data. Furthermore, Bofa Global Research predicted that at the end of 2023, the terminal rate would be between 5.0% and 5.25%. It had previously earlier forecast two rate increases of 25 basis points apiece, which was greater than UBS’s projections. European Investment Bank has operations iIn March, there may be a rate increase in Europe, according to them. The present cycle of hiking will come to an end then. By the end of 2023, the policy aim would remain 4.75-5%.
