Goldman Sachs: Fed To Hike In July 2022

Ahead of the Nov FOMC meeting, Goldman has pulled forward its rate hike expectations by one year as they now expect core PCE inflation to remain above 3% when the taper concludes.

• Goldman's in line with consensus on taper pace etc, though notes "large surprises on the virus, inflation, wage growth, or inflation expectations could prompt a revision [to the Fed's taper path], but we think the hurdle for a change in either direction is high."
• Statement: The Fed could announce taper reductions for both November and December; alternatively could announce that further reductions will continue at the same pace each month unless economic developments deviate substantially form its expectations.
• Statement to acknowledge that inflation is likely to remain high for somewhat longer. Possible modification of ""inflation having run persistently below this longer-run goal".
• Press conference: Powell likely to acknowledge more persistent inflationary pressure from strong rent and wage growth.
• Future action:Goldman has pulled forward its liftoff expectation by a year (was Jul 2023): Fed to liftoff in Jul 2022, shortly after the taper concludes, with another hike in Nov 2022, and 2 hikes per year after that, though the "range of possible outcomes is wide, especially in the longer term". 3 hikes in 2022 a possibility.