Economists at Goldman Sachs Group now expect the Federal Reserve to raise interest rates seven times this year to combat inflation. Their forecast earlier was at the five rates hike.
The strategists view changed after U.S. CPI inflation gauge in January showed a 7.5% increase on an annual basis underscoring the biggest since 1982. Inflation number extended beyond volatile food and energy prices to household furnishings and even health insurance.
Jan Hatzius team are projecting the Fed will move rate by 25 basis points at seven consecutive meetings.
According to Goldman, the high short-term inflation would likely lead to policymakers pointing towards more incremental moves.
“Most Fed officials who have commented have opposed a 50 basis points hike in March,” the Goldman analysts wrote in a note.
“We therefore think that the more likely path is a longer series of 25 basis points hikes instead.”