Goldman’s Hatzius Sees ‘Significant Impact’ From Rate Projection

Federal Reserve projections for where the federal funds rate will be in 2016 are a central piece of information being released in conjunction with the policy-maker meeting ending today, said Goldman Sachs Group Inc. chief economist Jan Hatzius.

“That is the first time that FOMC participants are going to be telling us where they see monetary policy that far out in the future,” Hatzius said of the Federal Open Market Committee’s two-day session on Bloomberg Television’s Market Makers with Stephanie Ruhle and Erik Schatzker. “Our expectation is that most of the participants will project something in the low two’s, but I think there will be a significant impact from whatever they do.”

Fed policy makers will also probably decide today whether to taper $85 billion in monthly bond buying at their meeting in Washington, dialing down monthly Treasury purchases by $5 billion to $40 billion while maintaining mortgage-backed securities purchases at $40 billion, according to a Bloomberg News survey of economists.

“No tapering would definitely be a surprise,” Hatzius said. “Investors are very much on board with the idea that you get some tapering.”

The Fed will also release its economic forecasts today, and Hatzius said “it is pretty clear that 2013 growth numbers are going to have to come down.”

To contact the reporter on this story: Jeanna Smialek in Washington at jsmialek1@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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