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Goldman Sachs predicts 3 rate hikes, Fed funds rate to reach 5.25-5.5%

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According to reports, Goldman Sachs: It is expected that the Federal Reserve will raise interest rates three times by 25 basis points in March, May and June 20…

Goldman Sachs predicts 3 rate hikes, Fed funds rate to reach 5.25-5.5%

According to reports, Goldman Sachs: It is expected that the Federal Reserve will raise interest rates three times by 25 basis points in March, May and June 2023, and the peak of the federal funds rate will reach 5.25-5.5%.

Goldman Sachs: The Federal Reserve is expected to raise interest rates three times by 25 basis points in March, May and June

Interpretation of the news:


Goldman Sachs has issued a report predicting that the Federal Reserve will raise interest rates three times by 25 basis points in March, May, and June 2023. This projection comes as the U.S. economy appears to be rebounding from the pandemic-related downturn that has plagued the country for over a year.

The projected rate hikes of 25 basis points each would bring the federal funds rate to a range of 5.25-5.5%, which is almost three times the current rate. The federal funds rate is the interest rate at which depository institutions lend reserve balances to other depository institutions overnight, on an uncollateralized basis.

Goldman Sachs based their prediction on a few factors, including rising inflation expectations and potential fiscal policy stimulus that could accelerate growth, leading to increased demand for goods and services. The report also notes that the Fed has recently revised its monetary policy framework to allow for higher inflation and is likely to keep interest rates low for some time, so long as inflation is expected to remain below its target of 2%.

However, as the economy recovers and begins to overheat, the Fed may feel compelled to raise rates more aggressively to prevent inflation from spiraling out of control. If inflation continues to rise, the Fed would have to address the issue by tightening monetary policy, which means raising interest rates.

The Goldman Sachs report suggests that these hikes will occur in a controlled and phased manner and not be sudden shocks to the market. Investors and borrowers, therefore, could prepare for this timeline of rate hikes for 2023.

Overall, the report from Goldman Sachs is a reminder that despite the pandemic’s impact on the economy, the Federal Reserve remains committed to its mandate of maintaining price stability and full employment. The projected rate hikes are a signal of the Fed’s concerns about rising inflation and its willingness to do what is necessary to prevent it from getting out of hand.

In conclusion, the Goldman Sachs report indicating three rate hikes by the Federal Reserve in 2023, with the federal funds rate peaking between 5.25-5.5%, indicates a preventive measure to control the anticipated inflation in the future. Investors and borrowers are advised to prepare and plan for higher interest rates in months to come.

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