US Fed to embark on fastest tightening cycle in recent history, warns Goldman Sachs

The US Federal Reserve will embark on the fastest tightening of monetary policy in recent history this year to tame runaway stateside inflation, Wall Street analysts are betting.

Chair Jerome Powell and co will lead the charge against the soaring cost of living across the pond by hiking interest rates seven times in 2022, according to Goldman Sachs.

Fresh figures released last week revealed prices in the US are accelerating at the fastest rate in 40 years, with inflation hitting 7.5 per cent, well above the Fed’s long term target of two per cent.

These red hot inflation figures prompted Goldman Sachs to price in two further rate hikes this year.

Investors now see the odds of the Fed defying recent history and raising borrowing costs 50 basis points at its next meeting in March as shortening.

“We see the arguments for a 50 basis point rate hike in March. The level of the funds rate looks inappropriate,” Goldman said.