Goldman Sachs, BofA See Fed Extending Rate Hikes Into June
- Jobs revisions point to stronger labor market momentum
- Changes follow stronger inflation and employment data
The Marriner S. Eccles Federal Reserve Board building in Washington, DC.
Photographer: Joshua Roberts/Bloomberg
Bank of America Corp. and Goldman Sachs Group Inc. economists now see the Federal Reserve extending its interest-rate hiking campaign for longer than expected on the heels of stronger economic data.
While some of the strength may be due in part to seasonal adjustments, it is “hard to ignore” employment data that point to stronger labor market momentum, Bank of America economists led by Michael Gapen said in a Feb. 16 note. The team is now forecasting a 25 basis-point increase in June and a terminal fed funds rate of 5.25% to 5.5%, compared to previous expectations that rate increases would end in May and peak at a range of 5% to 5.25%.