According to Bloomberg News, Goldman Sachs Group Inc, an economist stated that there is a risk that the Federal Reserve will start from March onwards make monetary policy stringent at every meeting, which is a much more aggressive approach in comparison to what the Wall Street bank is anticipating currently.
In a report released on the weekend, Jan Hatzius led the economists at Goldman Sachs. They meant for the clients that they are expecting the hikes in the interest rates in March, June, September, and again in December, and the central bank will likely begin a reduction in the balance sheet starting July.
However, they also said that the inflation pressures imply that the associated risks are heavier on the upper side of their baseline. They also said that it is pretty likely that the officials will be acting at every meeting until the time the inflation scenario changes.
Bloomberg News states that this scenario will also increase the chances of an additional hike in rates or an announcement of the balance sheet in May, and more fantastic than four hikes in the current year, as per the economists. They also state that they apprehend potential triggers related to a shift to rate surges at every meeting.
Jerome Powell and his colleagues are expected to meet amidst expectations this week that they will hike the rate willingly, starting from near zero in March 2022.
As far as potential spurs or triggers for stringent policies are concerned, there would be a further rise in expectations in long-term inflation or yet another surprise waiting related to inflation, said the Goldman Sachs economists.
They also stated that they were already very concerned about the inflation outlook related to the new omicron coronavirus variant and the constant strength in growth of wages.
