The Federal Reserve could hike interest rates more times than expected this year as it aims to curtail the ongoing inflation surge, according to analysts at Goldman Sachs.
Goldman’s current projections call for four rate hikes in 2022, with hikes coming in March, June, September and December. But with inflation at a four-decade high, the central bank could adopt an even more hawkish policy stance, analysts said in a note to clients over the weekend.
“We see a risk that the [Federal Open Markets Committee] will want to take some tightening action at every meeting until that picture changes,” the Goldman Sachs analysts said. “This raises the possibility of a hike, or an earlier balance sheet announcement in May, and of more than four hikes this year.”
The Fed is set to tighten monetary policy in the coming months, with efforts to include rate hikes and trimming of the central bank’s nearly $9 trillion in bond holdings. The central bank’s last rate hike occurred in December 2019, months before the COVID-19 pandemic began.