Analysts at Goldman Sachs Predict Future FED Interest Rate Determinations

Experts at Goldman Sachs have made public their forecasts for the Federal Reserve’s future actions.

Goldman Sachs strategists produced a study predicting that the US Federal Reserve would not raise interest rates at their meeting on October 31 and November 1.

When Fed members gather next week, strategists expect them to increase their projections for economic growth.

The research indicates that the Federal Open Market Committee (FOMC) may forego a last raise this year due to labor market rebalancing, favorable inflation data, and the predicted growth gap in the fourth quarter.

A 9-10 majority on the Fed’s dot plot, which displays officials’ interest rate predictions, would signal that the central bank would still make another raise merely to retain flexibility for the time being, according to Goldman’s analysts.

According to CME Group’s FedWatch instrument, futures related to the Fed’s benchmark overnight interest rate estimated a 98% likelihood that the agency would keep rates unchanged at the conclusion of its Sept. 19-20 meeting. On Saturday, economists estimated a 72% chance that the policy rate, which sits at a range of 5.25%-5.50%, will remain unchanged at the meeting scheduled for October 31 and November 1.

If inflation remains low throughout next year, “gradual” interest rate decreases may be implemented, according to Goldman Sachs. When policymakers update economic predictions on Wednesday, analysts expect the central bank to acknowledge the economy’s resiliency by raising its 2023 U.S. growth expectations to 2.1% from 1%.

The FED’s projected unemployment rate for 2023 is anticipated to be reduced by 0.2 percentage points, to 3.9%, while the projected core inflation rate is anticipated to be reduced by 0.4 percentage points, to 3.5%.

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