The Fed is launching a faster downsizing plan from January – Goldman Sachs

Federal Reserve Chairman Jerome Powell listens as US President Joe Biden nominates him for another four-year term in the Eisenhower Executive Office Buildings South Court Auditorium at the White House in Washington, DC, on November 22, 2021. REUTERS / Kevin Lamarque / File Photo

LONDON, Nov. 25 (Reuters) – The US Federal Reserve is likely to double the pace of downgrading its monthly bond purchases from January to $ 30 billion and winding up its bond-buying scheme from the mid-March pandemic, Goldman Sachs strategists said in a daily note Thursday .

“Increased openness to accelerate the slowdown is likely to reflect both somewhat higher-than-expected inflation over the past two months and greater comfort among Fed officials in that a faster pace would not shock financial markets,” said analysts led by Jan. Hatzius and a client. Note.

Despite the accelerated downsizing calendar, Goldman expects the Fed to only start raising interest rates from June a total of three times in 2022. The US investment bank is one of several banks that have recently raised their expectations for rate hikes for 2022 to three from thaw.

Minutes from the central bank’s political meeting on 2-3. November showed that various policy makers said they would be open to speeding up the downsizing of their bond buying program if high inflation held, and would move faster to raise interest rates. Read more

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Reporting by Saikat Chatterjee Editing by Tommy Wilkes

Our standards: Thomson Reuters Trust Principles.

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