The US Federal Reserve (Fed) is expected to raise its benchmark interest rates in July 2022 to counter the risks of rising inflationary pressures, Bloomberg reports, citing comments from Goldman Sachs economists led by Jan Hatzius.

Key quotes

“The Fed will raise its benchmark from a range of zero to 0.25% soon after it stops tapering its massive asset-purchase program.”

“A second increase will follow in November 2022 and the central bank will then raise rates two times a year after that.”

“The main reason for their new forecast was they now expect inflation to prove more stubborn than they previously thought.”

“Expect consumer price inflation outside of food and energy costs to still be above 4% when the taper ends.”

“We think this will make a seamless move from tapering to rate hikes the path of least resistance.”

“With inflation far above target and job availability high, officials will likely conclude most of any remaining labor force weakness is structural or voluntary.”

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