Goldman Sachs chief economist downplays prospect of zero rate cut from Fed in 2024 | Wilnesh News

Goldman Sachs Chief economist Jan Hatzius said on Friday that he still expects the Fed to implement three interest rate cuts, adding that he would be “very surprised” if the central bank ultimately decided that no rate cuts were needed at all.

His comments came shortly after Minneapolis Federal Reserve Bank President Neel Kashkari became the latest high-profile official to say zero inflation could be implemented by the end of the year if inflation remains elevated. interest rate.

“If we continue to see inflation move sideways, then I would question whether we need to cut rates,” Kashkari said in an interview Thursday. Pensions and investments.

Separately, Federal Reserve Chairman Jerome Powell said earlier this week that policymakers will need some time to assess current inflation conditions, making the timing of potential interest rate cuts uncertain.

Market participants have been closely watching comments from Fed officials on the number of rate cuts expected this year, and many will look to Friday’s jobs data for further clues about the labor market and inflation.

In an interview with CNBC’s Steve Sedgwick on the sidelines of the Ambrosetti Forum on Friday, Goldman Sachs’ Harzius said he was bullish on the U.S. economic outlook.

“I’m certainly optimistic about this year. In terms of growth, we’re well above consensus, close to 3% growth this year,” Hatzius said.

“In terms of recession risk, we’re well below consensus. We see recession risk over the next 12 months at 15%, which is the average chance of a recession because over the past decade we’ve had one about every seven years Decline. Wartime.”

Hartius said he was also optimistic that strong economic growth this year could coincide with cooling inflation, with the personal consumption expenditures price index expected to reach 2.4% by the end of 2024 and 2% next year.

The core PCE price index, which excludes food and energy components, is the Fed’s preferred inflation gauge.

“In this environment, I would expect some rate cuts based on comments from Chairman Powell and other Fed officials,” Hatzius said.

“It’s more uncertain. Of course, the timing will depend on the recent data, the Fed’s response function, but based on our forecast, I would be very surprised if we don’t have a rate cut this year. Very surprised.”

As expected, the Federal Reserve kept interest rates unchanged for the fifth consecutive meeting last month, keeping its benchmark overnight borrowing rate at 5.25%-5.5%. The Federal Reserve also stated that it still expects to cut interest rates by 3 percentage points by the end of 2024.

Traders see a near 94% chance of keeping interest rates unchanged at the Fed’s May policy meeting, according to Fed data CME Group Fed Watch Tool as of Friday morning. They put the chance of a rate cut at the June meeting at about 60%, down sharply from a week ago.