Goldman Sachs comments on the Federal Reserve vs. the European Central Bank.

This summary is via the folks at eFX.

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Goldman Sachs anticipates the Fed's hiking cycle to be complete, while one final hike from the ECB is in the forecast.

Key Points:

  • Fed's Stance: Goldman believes that the Fed has wrapped up its cycle of rate hikes, with the intention of maintaining the current Fed funds rate range of 5.25-5.5% till 2024. The first rate reduction is anticipated in the second quarter of 2024, which is expected to proceed at a pace of 25bp per quarter. The projected stabilization for the Fed funds rate range is between 3-3.25%.
  • ECB's Next Moves: For the European Central Bank, Goldman forecasts a final rate hike of 25 basis points in September, leading to a terminal rate of 4.00%. This expectation is grounded in the persistent services inflation observed in Europe. Post this hike, the ECB is predicted to stay on hold until the fourth quarter of 2024.
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