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Goldman Sachs: Fed To Provide Taper "Advance Notice" This Week

FED

Goldman expects the Fed to provide "advance notice" at the Sept meeting that tapering is coming, with an announcement in Nov. Though Fed won't reveal the pace this week.

  • Goldman sees hawkish risks to its expectations, incl a 2022 hiking median dot.
  • Statement: To say something like: "The Committee expects to begin reducing the pace of its asset purchases relatively soon, provided that the economy evolves broadly as anticipated."
  • SEP/Dot Plot: No hikes in 2022, 2 hikes in 2023, 3 hikes in 2024. Means will rise and many participants will show 4 hikes in 2024. Would be surprising if Powell (and most Govs) now think a 2022 hike is appropriate just weeks after dovish Jackson Hole speech.
  • 2021 GDP f'cast cut substantially, 2021 and 2022 core PCE forecasts to remain stable, peaking at 2.2% further on, perhaps in 2024.
  • Future action: Taper pace of $15B ($10B Tsy / $5B MBS) per meeting, ending in September 2022. Though tough call whether the FOMC decides that pace is per month instead of per meeting. Rate liftoff in 2023.
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