(Markets Insider) Goldman Sachs has predicted an increase in the US interest rate by 50 basis points in Fed’s May and June meetings, amid tough talk by the chair Jerome Powell.
Goldman’s note comes after Powell warned that inflation is too high, while the labor market is very strong.
Powell said that the central bank needs to move quickly, hinting at raising the rate by more than 25 basis points at its meeting(s).
Goldman took a leaf from the Fed chair, saying that the comments point to a possible quick rate increase. The projections compare to the bank’s initial expectation of 25 basis point increases in the scheduled meetings.
The US bank expects the Fed to maintain rate hikes until a peak of 3% to 3.25% is attained towards the end of next year.
The Federal Reserve has, in the past, hiked rates by 25 basis points, with the potential acceleration seen in response to the spiraling inflation, which has hit a 40-year high.
If the Fed hikes the rate by 50 basis points in May and June, the federal funds rate will range between 1.25% and 1.50% in June.
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