Goldman Sachs: Growth is bigger Fed-hike factor than market thinks - BBG

Goldman Sachs economists led by Jan Hatzius wrote in its latest note published on Sunday, the US economic growth outlook is of bigger significance for the Fed to consider the rate hike, when compared to inflation and wage data that have disappointed over the last months, Bloomberg reports.

Goldman forecasts the Fed to raise rates four times next year, while Fed dot chart showed three rate hikes in 2018.

Key Quotes:

“While we believe the heightened market focus on price and wage data is indeed warranted, we think the market may be under-appreciating the importance of growth indicators for the monetary policy outlook.”

“The Fed does not require rising or above-target inflation to tighten policy on a quarterly basis, so long as the broader economic outlook remains consistent with a return to target.”