High Inflation Will Force Fed to Roll Back Stimulus Faster, Goldman Sachs Predicts

Goldman Sachs strategists predicted in a Nov. 25 note that hotter-than-expected inflation will push the Federal Reserve to accelerate the pace of phasing out its massive bond-buying program in a bid to ease price pressures. At their most recent policy meeting in early November, Fed officials said they would start dialing back the central bank’s monthly purchases of Treasury and mortgage-backed securities by $15 billion per month, which would bring them down to zero over eight months, with the so-called “taper” concluding in June. At the same time, Fed policymakers left the door open to a faster taper in the event of signs that higher inflation were to become a more permanent fixture of American life. Newly released minutes from the Fed’s Nov. 2–3 meeting show policymakers worried about the persistence of price pressures, softening their tone on the “transitory” inflation narrative, and acknowledging the growing risk that future inflation expectations could become …

Related Post

This website uses cookies.