Three more U.S. rate hikes this year: Goldman Sachs, BofA



Goldman Sachs and Bank of America said they expect the U.S. Federal Reserve to raise interest rates three more times this year, lifting their estimates after data pointed to persistent inflation and a resilient labor market.

Producer prices accelerated in January by the biggest margin in seven months, according to official data on Thursday, while a Labor Department report showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week.

Due to the high inflation, the Fed is expected to add a 25-basis-point rate hike in June, for a peak funds rate of 5.2 percent to 5.5 percent, said Goldman Sachs economists led by Jan Hatzius in a note dated Thursday.

Meanwhile, money markets are currently pricing in a terminal rate of 5.3 percent by July.

Bank of America Global Research also expects a 25bps hike in the Fed's June meeting, pushing the terminal rate up to a 5.25 percent to 5.5 percent range.

After the recent U.S. data, European investment bank UBS said it was expecting the Fed to raise rates by 25 bps at its March and May meetings, which may leave the Fed funds rate at the five percent to 5.25 percent range.

In sharp contrast to its U.S. peers, however, UBS estimated that the Fed would ease interest rates at the September meeting this year.