Goldman Sachs economists say Fed policy has reduced the risk of a recession over the next year to just 10% from a previous 20%, at the end of the fourth quarter.
Goldman Sachs economists say Federal Reserve policy has reduced the risk of a recession over the next year to just 10% from a previous 20% at the end of the fourth quarter.
But the Fed's success in fighting off a recession may actually make it reconsider its policy of holding off interest rate hikes, as the central bank itself has noted, the economists wrote. The Fed was expected to release the minutes Wednesday of the Federal Open Market Committee's March meeting, when it held rates steady. The Fed, after that meeting, released revised economic and interest rate forecasts that showed expectations for a weaker economy and no rate increases this year, reinforcing the"patient" stance officials had been discussing.
Economists have been ratcheting up expectations for first quarter growth and now many of them see it tracking closer to 2 percent than 1 percent, as it had previously. The yield curve is no longer inverted between the 10-year note yield an the 3-month bill yield, as it had been several weeks ago. A yield curve inversion is seen as a reliable recession signal.
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