Goldman Sachs expects the Federal Reserve to pause rate hikes this week.
[Financial Channel/Comprehensive Report] Goldman Sachs (Goldman Sachs) said on Monday (20th) that due to the recent pressure on the banking system, the Federal Reserve (Fed) is not expected to raise interest rates this week.
Goldman Sachs economists led by Jan Hatzius said in an analysis: "As the banking system comes under pressure, we expect the Federal Open Market Committee (FOMC) to pause interest rate hikes at its meeting this week in March. A lot has been done to protect the financial system, but the market doesn't seem to be buying it."
The market believes that the failure of Silicon Valley Bank (SVB) was due to the Fed's aggressive interest rate hikes.
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Goldman Sachs also pointed out that not raising interest rates is just pressing the "pause button" on the way to fight inflation, so the Fed can still achieve its long-term goal of maintaining stable inflation.
"If appropriate, the FOMC could quickly get back on track, and banking stress could have a deflationary effect," he said.
The Fed's current target rate range is 4.5% to 4.75%.
Last month, before the pressure on the banking industry was exposed, the Fed had just raised interest rates by 1 yard.
Goldman Sachs expects that after this pause in rate hikes, the Fed will continue to raise interest rates by 1 yard at its next meeting in May, and by 1 yard in June and July.
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