Goldman Sachs leaning on the Wall Street Journal article published earlier:
- An article in the Wall Street Journal by Nick Timiraos reported that Fed officials are likely "to consider surprising markets with a larger-than-expected 0.75-percentage-point interest rate increase at their meeting this week."The article is a departure from another article that Nick Timiraos published yesterday that characterized such a move as "unlikely."Our best guess is therefore that the article is a hint from the Fed leadership that a 75bp rate hike is coming at the June FOMC meeting on Wednesday.
Revised forecasts from GS:
- 75bp hikes in June and July.This would quickly reset the level of the funds rate at 2.25-2.5%,the FOMC's median estimate of the neutral rate.
- 50bp hike in September
- 25bp hikes in November and December,for an unchanged terminal rate of 3.25-3.5%.
- We are also revising our forecast of the dot plot. We now expect the median dot to show 3.25-3.5%at end-2022, the same as our forecast. We expect the median dot to show two further hikes in 2023 to 3.75-4%, followed by one cut in 2024 to 3.5-3.75%.
Wonder if JPM and GS were reading ForexLive on Sunday evening?