Our Fed forecast is being revised to include 75bps hikes in June and July – Goldman Sachs

“Our Fed forecast is being revised to include 75bps hikes in June and July,” said Goldman Sachs in its latest Fed forecasts per Reuters. It should be noted that the US rate futures imply 96% chance of Fed raising rates by 75 bps at June meeting.

Key quotes

We anticipate two more rate increases in 2023 to 3.75-4%, followed by one cut in 2024 to 3.5-3.75%.

We anticipate a 50bp increase in September, followed by 25bp increases in November and December, for an unchanged terminal rate of 3.25-3.5%.

We expect the median dot to show 3.25-3.5% at end-2022.

FX implications

Recently growing chatters over a 75 bp rate hike by the Fed has been the key catalyst for the heavy risk-off mood. The same weighed down equities and propelled the US dollar, as well as Treasury bond yields of late.

Also read: Investors weigh the probabilities of three Fed scenarios: A 50bps, 75bps or even a 100bps hike