Goldman Sachs has revised its US interest rate forecast due to “stress in the banking system”. The global investment bank no longer expects the Federal Reserve to raise interest rates at its Federal Open Market Committee (FOMC) meeting in March after the central bank announced measures to bail out depositors from failed Silicon Valley Banks. and Signature Bank.
Goldman Sachs revises rate hike forecast
Global investment bank Goldman Sachs has revised its interest rate hike prediction for the upcoming Federal Open Market Committee (FOMC) meeting in March. In a note to clients on Sunday, the bank’s economists, led by its chief economist Jan Hatzius, detailed:
In light of the stress in the banking system, we no longer expect the FOMC to raise rates at its next meeting on March 22.
Last month, the FOMC raised the federal funds rate by 25 basis points to a target range of 4.5% to 4.75%, the highest since October 2007.
Goldman revised its forecast shortly after the Treasury Department, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (FDIC) Announced rescue measures for depositors of two failed banks. Regulators shut down Silicon Valley Bank on Friday and Signature Bank on Sunday. In addition, the Federal Reserve Board saying on Sunday that additional funding will be available to eligible depository institutions.
Commenting on the Treasury Department’s decision to designate Silicon Valley Bank and Signature Bank as systemic risks and the Federal Reserve’s establishment of a new Bank Term Financing Program to support institutions affected by market instability Later, Goldman Sachs economists explained:
Both steps are likely to increase confidence among depositors, though they fall short of an FDIC guarantee for uninsured accounts, as implemented in 2008.
The economists also noted that they still expect the Fed to raise interest rates by 25 basis points in May, June and July, with a terminal rate expectation of 5.25% to 5.5%.
Do you think the Fed will raise interest rates at its March meeting next week? Let us know in the comments section.
image credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or a solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
