Tuesday, June 16, 2015

Goldman Sachs Forecasting Two Interest Rate Hikes In 2015

Wow, as U.S. economic data has improved heading into a June Federal Open Market Committee meeting of central bankers, “on balance surpassing market expectations since the last FOMC meeting,” a new Goldman Sachs Group Inc  research piece, written by Goldman analysts Francesco Garzarelli, Silvia Ardagna, Marino Cena and Yassine Slaoui, says that the Fed will raise interest rates twice this year.

So much for the idea of a new round of QE anytime soon.

The report, titled “The Stage is Set to be ‘Bearish’ in 2015 (2nd Half),” says that with second quarter gross domestic product growth “tracking at 3 percent,” watch for this pace of growth to continue through the balance of 2015 as consumer spending ramps up.

This “improved momentum” is blowing a strong breeze at the economy’s back is supportive for a September rate hike, consistent with the investment bank’s view.

The Goldman report took issue with the market pricing in only one rate hike. "Consider that the market is pricing only one hike by December 2015 and around 225bp in hikes by December 2018, whereas we forecast two hikes this year and the Fed Funds at around 3.75 percent by 2018.”



  1. Replies
    1. Aw come on, they could decide on a symbolic rate hike and then divide in two.

  2. I remember this one of Jan 2013:

    "Jeffrey Currie, the influential oil analyst who heads commodity research at Goldman Sachs, said today at a conference in Frankfurt, Germany, that Brent crude oil prices could rise to $150 per barrel this summer."

    In hindsight of course, it was a great time to sell oil. Its very easy to visualize Goldman traders doing the exact opposite of the suggestions taken from their public commentary on the markets.