The Goldman Sachs logo is seen on the trading floor of the New York Stock Exchange (NYSE) in New York, New York, United States on November 17, 2021. REUTERS / Andrew Kelly

Register now for FREE and unlimited access to Reuters.com

Register

Jan. 10 (Reuters) – Goldman Sachs (GS.N) expects the Federal Reserve to raise interest rates four times this year and begin the process of downsizing its balance sheet as early as July, joining other major banks to forecast an aggressive tightening of US monetary policy.

The Bank of Wall Street had earlier predicted that the Fed would hike rates in March, June and September, but now expects another hike in December.

Goldman Sachs’ forecast rate is only slightly above market expectations for 2022, “but the gap widens considerably in the following years,” chief economist Jan Hatzius wrote in a note released Sunday.

Register now for FREE and unlimited access to Reuters.com

Register

Fed officials said last month that the US labor market was “very tight” and may need the central bank to raise rates sooner than expected, but also reduce its overall holdings to bring the downside. high inflation, according to the minutes of its December meeting last week, prompting traders to price in about an 80% chance of a rate hike in March.

JPMorgan (JPM.N) on Friday advanced its forecast for the first rate hike since the pandemic began in March from June, and sees increases every quarter this year.

“We think Fed officials come to the same conclusion that the job market is very tight, making it difficult to sell the first hike until June, our previous call,” the chief economist wrote. American banker Michael Feroli in a note. .

Deutsche Bank (DBKGn.DE) also said on Friday that it expects a total of four Fed rate hikes this year after December’s employment data, although below expectations of the Fed. market, have shown more progress towards maximum employment. The German bank expects the Fed’s balance sheet runoff to begin in the third quarter. Read more

San Francisco Fed President Mary Daly, who has not voted this year, said on Friday she could see the central bank reduce its balance sheet by more than $ 8 trillion shortly after raising its rate once or twice. Read more

Register now for FREE and unlimited access to Reuters.com

Register

Reporting by Aniruddha Ghosh and Sruthi Shankar in Bangalore; Editing by Krishna Chandra Eluri

Our Standards: Thomson Reuters Trust Principles.