Odds of a March Fed rate hike seen slightly below 50% - Goldman Sachs

Dhwani Mehta FXStreet

In the view of the analysts at Goldman Sachs, the Federal Reserve (Fed) may not hike the rates 4 times next year, adding that a March rate hike appears unlikely.

Key Quotes:

“A hike in December is still very likely (in our view 90%).

The probability of a move in March has now fallen to slightly below 50%.

A decision to pause in March would also be consistent with the likelihood that tariff-related uncertainty will look particularly high around the end of the 90-day grace period on March 1.

We emphasize that this is a close call because there are still good arguments for a March hike, including a continued positive fiscal impulse that should keep growth above trend in Q1 even with tighter financial conditions, as well as a funds rate that remains at the very bottom end of the committee's range of neutral rate estimates even after a December hike.

Moreover, our forecast of no hike assumes that the median number of 2019 hikes in the December dot plot moves down from 3 to 2; if the median instead stays at 3 hikes, the probability of March would increase again.”

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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