Business

Goldman Sachs analysts not expecting rate hike this month due to stress on banks

Economists for Goldman Sachs said they do not expect the Federal Reserve to raise interest rates at its next meeting this month, citing the pressure that already increased rates have put on banks following the historic failure of Silicon Valley Bank.

“In light of the stress in the banking system, we no longer expect the FOMC (Federal Open Market Committee) to deliver a rate hike at its next meeting on March 22,” Goldman economist Jan Hatzius said in a Sunday report.

Goldman previously expected the Fed to hand down a 25-point hike this month, but analysts are tempering their expectations for rate increases after havoc in the banking industry was set in motion by the fall of Silicon Valley Bank.

The Fed has deployed interest rate hikes in an attempt to temper inflation in the economy, trying to slow down activity. But after the abrupt takeover of Silicon Valley Bank by federal regulators last week, many pointed to the pressure that rising interest rates put on the bank, which bought up near zero-interest bonds in years past and have seen them lose value with subsequent rate hikes.

Fed Chair Jerome Powell told lawmakers last week that recent economic numbers have shown that the cooling down in the economy in the past few months may have reversed, potentially necessitating more aggressive rate hikes in the near future. Strong job numbers from early this year have shown an economy that is stingy to the Fed’s cooling measures.


The federal government took steps to try to bolster depositor confidence in the banking system’s stability by deploying an insurance fund to ensure all depositors had full access to all of their money in Silicon Valley Bank on Monday.

Goldman analysts said they still expect the 25-point hikes in May, June and July.