Sunday, 23 January, 2022
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2022-01-23 07:16:44.193 GMT
By Simon Kennedy
(Bloomberg) — Goldman Sachs Group Inc. economists said
they see a risk the Federal Reserve will tighten monetary policy
at every policy meeting from March, a more aggressive approach
than the Wall Street bank currently anticipates.
The Goldman Sachs economists led by Jan Hatzius said in a
weekend report to clients that they currently expect interest-
rate hikes in March, June, September and December and for the
central bank to announce the start of a reduction in its balance
sheet in July.
But they said inflation pressures mean that the “risks are
tilted somewhat to the upside of our baseline,” and there is a
chance officials will act “at every meeting until the inflation
“This raises the possibility of an additional hike or an
earlier balance sheet announcement in May, and of more than four
hikes this year,” the economists said. “We could imagine a
number of potential triggers for a shift to rate hikes at
Chair Jerome Powell and colleagues meet this week amid
expectations they will signal a willingness to lift rates from
near zero in March.
Among potential spurs for even tighter policy would be a
further increase in long-term inflation expectations or another
surprise on inflation, the Goldman Sachs economists said.
They noted they had already been made more concerned about
the inflation outlook by the arrival of the omicron variant and
continued strength in wage growth.
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