Goldman Sachs expects the Federal Open Market Committee to leave the policy rate unchanged this year, according to a June 17 note, even as Chair Kevin Warsh pledged to restore price stability after five years of missing the 2% inflation target. The FOMC voted 12-0 on June 17 to hold the benchmark Federal Funds Rate at 3.50% to 3.75%, dropping forward guidance from its statement. Goldman said a majority of voters still lean toward no change, though a rate hike could gain support depending on inflation prints and job growth. Futures traders see a roughly 60% chance of at least a 25-basis-point hike by December, while the May core PCE index is expected to hold at 3.3% and the Cleveland Fed model projects headline PCE rising to 3.97%.
Goldman Sachs Group IncGoldman Sachs expects no rate cuts this year, which may pressure investment banking and trading revenues.
CME Group IncCME's interest rate derivatives volumes may be affected by rate path uncertainty, but impact is mixed.