Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, D.C., U.S., on Wednesday, Sept. 18, 2019. Federal Reserve policy makers lowered their main interest rate for a second time this year while splitting over the need for further easing, caught between uncertainty over trade and global growth and a domestic economy that's holding up well. Photographer: Andrew Harrer/Bloomberg Economists led by Jan Hatzius are tipping the Fed will move by 25 basis points at seven consecutive meetings of the Federal Open Market Committee.
While there’s a case to be made for a 50 basis point hike in March given the combination of very high inflation, hot wage growth and high short-term inflation expectations, the indications from policy makers so far are pointing to more incremental moves, according to the Goldman analysts.
“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.”
Federal Reserve Bank of St. Louis President James Bullard said he supports raising interest rates by a full percentage point by the start of July -- including the first half-point hike since 2000 -- in response to the hottest inflation in four decades.
“We would consider changing our forecast if other participants join him, especially if the market continues to price high odds of a 50 basis points move in March,” the Goldman analysts said.