Goldman Sachs said it now expects the U.S. Federal Reserve to raise interest rates three more times this year, by a quarter of a percentage point each, after data this week pointed to hot inflation and labor market resilience.
Producer prices accelerated in January by the biggest margin in seven months, one report on Thursday showed, while another showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week.
“In light of the stronger growth and firmer inflation news, we are adding a 25bp (basis points) rate hike in June to our Fed forecast, for a peak funds rate of 5.25-5.5%,” economists led by Jan Hatzius said in a note dated Thursday.
Meanwhile, money markets are currently pricing in a terminal rate of 5.3% by July.
A majority of the economists polled by Reuters before the latest data expected the Fed would raise rates at least twice more in coming months, with the risk of going higher still, although none of them expected a rate cut this year.
This report’s information was first seen on REUTERS; to read more, click this link.
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