Goldman Sachs wind back their 4 Fed rate hike forecast in 2019, March not likely

Author: Eamonn Sheridan | Category: Central Banks

Goldman Sachs on their outlook for the Federal Reserve tightening path ahead

  • hike in December is still very likely (in our view 90%)
  • probability of a move in March has now fallen to slightly below 50%
GS main points arguing against a March hike:
  • A decision to pause in March would also be consistent with the likelihood that tariff-related uncertainty will look particularly high around the end of the 90-day grace period on March 1
  • We emphasize that this is a close call because there are still good arguments for a March hike, including a continued positive fiscal impulse that should keep growth above trend in Q1 even with tighter financial conditions, as well as a funds rate that remains at the very bottom end of the committee's range of neutral rate estimates even after a December hike. 
  • Moreover, our forecast of no hike assumes that the median number of 2019 hikes in the December dot plot moves down from 3 to 2; if the median instead stays at 3 hikes, the probability of March would increase again
(bolding mine)

View is via GS economists

My previous post was on USD weakness, this likely a factor?

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