(Bloomberg) – The Federal Reserve will raise interest rates by a quarter of a percentage point at its March, May and June meetings in response to further economic expansion, according to Jan Hatzius of Goldman Sachs Group Inc.
“Recent numbers have been even stronger than expected on the growth side, and we’ve seen higher inflation numbers for January,” Hatzius, Goldman’s chief economist, told Annabelle Droulers for the Asia edition. from Bloomberg Daybreak, Tuesday.
“I don’t think that necessarily breaks the disinflation trend, but I do think it reinforces the idea that the Fed still has work to do,” he said. “So we think a more likely outcome is that the rate will rise another 75 basis points from here and there won’t be a cut until 2024.”
The Fed’s favorite inflation indicators this week, coupled with an increase in consumer spending, are seen as fueling debate among central bankers over the need to adjust the pace of rate hikes.
The U.S. personal consumption expenditure price index is expected to rise 0.5% in January from the previous month, the biggest rise since mid-2022.
Asked about the prospects for another 50 basis point Fed hike, Hatzius was skeptical, though he wouldn’t rule it out entirely.
“That would be a relatively big move because if you do a 50 point rally in March the market will probably create at least a decent estimate of the chances of another 50 point rally, so you need to see a lot of information to get in there. .direction and I don’t think we saw it.”
Hatzius, speaking in Hong Kong, said the ripple effects of China’s reopening from covid restrictions will be positive for growth, especially in the Asia-Pacific region and for countries interconnected with the world’s second-largest economy. .
Nota Original:Goldman Sees Fed Rise Another 75 Points on Stronger Growth
–With the collaboration of Annabelle Droulers.
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