Finance Update

Goldman Sachs: Goldman Sachs cuts recession chance in US to just above 10%

The Fed may need to reconsider their pause at some point.

Bloomberg|

Apr 11, 2019, 07.42 AM IST

AP

An easing in financial conditions has helped reduce downside risks considerably.

Economists at

Goldman Sachs

Group Inc. have lowered the likelihood of a US

recession

over the next four quarters to slightly over 10 per cent from roughly 20 per cent at the end of the fourth quarter.

An easing in financial conditions has helped reduce downside risks considerably, Goldman economists including Jan Hatzius and David Choi wrote in a note. Signals by the Federal Reserve that its interest-rate hiking cycle is on hold have played a role in lifting sentiment.

“The Fed’s dovish shift was likely designed to decrease downside risks, and our findings suggest that this has largely worked as planned,” they wrote.

Still, with better growth momentum and improving financial conditions, the Fed may need to reconsider their pause at some point, according to Goldman’s analysis.

“As the lingering effects of the Q4 tightening gradually fade away, the Fed may eventually be willing to revisit the need for patience, as indicated in the January minutes,” they wrote.

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Source

Prakash Poojary
Business Analyst

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