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.”
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