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- Goldman Sachs pushes back Fed hike forecast to 4Q 2020
Goldman Sachs pushes back Fed hike forecast to 4Q 2020
Economists at Goldman Sachs have pushed back their forecast for the Fed to raise interest rates amid low inflation and political scrutiny of the central bank’s decisions.
The U.S. bank now expects the Fed to hike in the fourth quarter of 2020 from the first quarter. The shift comes even as the bank lifted its U.S. GDP forecast to 2.5% in the second half of 2019 and 2.25% in the first half of 2020.
"But the inflation numbers have surprised to the downside even as the goalposts for the next rate hike have shifted higher with the FOMC’s emphasis on muted inflation pressures and review of its policy framework. Coupled with an increase in political scrutiny of monetary policy decisions, this has lowered the odds of a hike before next year’s presidential election," economists wrote in the note. "
Still, the better growth outlook means the U.S. bank added a second rate hike in 2021 to its forecast.
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