Three decade high inflation print will force US Fed’s hand, warns Goldman Sachs

The US Federal Reserve will have to tighten policy much quicker than they want in order to hose-down runaway inflation, a leading Wall Street investment bank said yesterday.

Goldman Sachs has bet on the Fed having to double the speed of scaling back its monthly asset purchases from January next year to and hiking interest rates from nearly zero in May.

Two further rate hikes would happen next year, and then another two in 2023.

If the world’s most influential central bank were to taper at a rate of $30bn, then its pandemic-era bond buying programme would end in March.

The forecast has been sparked by inflation – which is running at the highest print since 1990 – letting rip across the US economy.

Fed chair Jerome Powell announced earlier this month the central bank would start to wind down its bond purchases by $15bn a month.