US Interest Rates This Year

Goldman Sachs and Bank of America expect the US Federal Reserve to hike interest rates three more times this year, at present, they’re raising their estimates after data pointed to steady inflation and a strong labor market.

The Producer prices index rose in January, the most significant increase in seven months, according to data released by the Department of Labor on Thursday. Initial claims for state unemployment benefits dropped last week.

Goldman Sachs economist, led by Jan Hatzius, said in a statement on Thursday: “Considering the strong economy and low inflation news, we are adding 25 basis points (0.25%) to June’s rate hike and The Fed (Central Bank) forecast for the highest rate of 5.25% -5.5%.”

Bank of America Global Research also expects a 25bps hike at the Fed’s June meeting, pushing interest rates to 5.25% -5.5%. The Fed is expected to raise interest rates by 25 bps (0.25%) at its March and May meetings, which could leave the Fed rate between 5% -5.25%. However, UBS estimates the Fed will ease interest rates at the September meeting this year.

Most economists surveyed by Reuters before the latest data said they expect the Fed to hike interest rates at least twice in the coming months with their risks higher than this. None of them expect to cut interest rates this year.

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