Fed to Halt Rate Hikes, Crypto Discounts Expected: Goldman Analysis

• Goldman Sachs analysts predict that the Federal Reserve will halt interest rate hikes as inflation nears its 2% target.
• The analysts forecast a series of interest rate cuts beginning in the second quarter of 2024.
• The Federal Reserve had previously initiated one of the fastest series of interest rate increases in its history.

Goldman Sachs analysts foresee the Federal Reserve ceasing interest rate hikes as inflation approaches its target, with a series of rate cuts predicted to commence in 2024.

Approaching Inflation Targets and Interest Rates

Jan Hatzius and David Mericle, analysts at Goldman Sachs, have suggested that the Federal Reserve is likely to halt its interest rate increases as inflation nears its 2% target. They believe that the institution is keen to normalize interest rates but is not in a rush to do so. Consequently, they anticipate that interest rates will remain stable for a while longer. The analysts predict that rate cuts will begin in the second quarter of 2024, with a reduction of 25 basis points per quarter. However, they expressed some uncertainty regarding the exact pace of these reductions.

Previous Inflation and Interest Rate Trends

Last week, inflation rose less than expected, with figures falling below expert predictions. The annual inflation increase was reported at 3.2%, compared to the previous month’s figure of 3%. In March of the previous year, the Federal Reserve embarked on one of the fastest series of interest rate hikes in its history, including four consecutive increases of 75 basis points each, totaling ten consecutive rate hikes. The institution paused these increases for the first time in a long while in June, but resumed with a 25 basis point increase in July.

Future Federal Reserve Meetings

There will be no Federal Open Market Committee (FOMC) meeting in August to decide on the Federal Reserve’s interest rate. The next meeting is scheduled for the end of September.

Conclusion

In conclusion, Goldman Sachs analysts predict that the Federal Reserve will halt its interest rate hikes as inflation approaches its 2% target. They anticipate a series of rate cuts to begin in the second quarter of 2024, with a reduction of 25 basis points per quarter. However, the exact pace of these reductions remains uncertain. The next FOMC meeting to decide on the Federal Reserve’s interest rate is scheduled for the end of September.