Wed. 23 March RCL XD Bt 3.00

Fed moving faster; GS now forecasts +50bp hikes in May and June

Powell lately said “There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level”.

GS guesses that the shift in wording from “steadily” in January to “expeditiously” today is a signal that a 50bp rate hike is coming.

Now forecast +50bp hikes at both May and June meetings, followed by +25bp hikes at the 4 remaining meetings in 2022 and 3 quarterly hikes in 1Q-3Q23.

Leave the terminal rate forecast unchanged at 3.00-3.25%, and the QT to start at the May meeting (a +50bp hike in May is NOT an obstacle at this point).