The Federal Reserve is unlikely to raise interest rates at its Oct. 31-Nov. 1 meeting, Goldman Sachs strategists wrote on Saturday, while also forecasting the U.S. central bank would lift its economic growth projections when policymakers gather next week.
“On November, we think that further labor market rebalancing, better news on inflation, and the likely upcoming Q4 growth pothole will convince more participants that the FOMC (Federal Open Market Committee) can forgo a final hike this year, as we think it ultimately will,” the investment bank’s strategists wrote in a report.
Goldman’s strategists, however, wrote that they expect the Fed’s “dot plot,” which reflects policymakers’ interest rate projections and will be updated on Wednesday, to show “a narrow 10-9 majority still penciling in one more hike, if only to preserve flexibility for now,” they wrote.
As market participants try to gauge the Fed’s monetary policy trajectory, some big investors, including J.P. Morgan Asset Management and Janus Henderson Investors, have said the central bank is likely done hiking rates, following the most aggressive monetary policy tightening cycle in decades.
Futures tied to the Fed’s benchmark overnight interest rate were factoring in a 98% chance that the central bank would leave rates unchanged at the end of its Sept. 19-20 meeting, according to CME Group’s FedWatch Tool. The odds for the policy rate, which is currently in the 5.25%-5.50% range, staying unchanged at the Oct. 31-Nov. 1 gathering stood at roughly 72% on Saturday, CME’s data showed.
Next year could see “gradual” rate cuts if inflation continues to cool, Goldman’s strategists added.
They also said the central bank could raise its estimates for 2023 U.S. growth to 2.1% from 1%, when policymakers update their economic projections on Wednesday, reflecting the economy’s resilience.
Goldman’s strategists also expect the Fed to lower the estimate for the 2023 unemployment rate by two-tenths of a percentage point to 3.9%, and reduce the estimate for core inflation by four-tenths of a percentage point to 3.5%.
On his first trip to Cuba during his third term in office, Brazilian President Luiz Inacio Lula da Silva called the embargo imposed by the United States on the island “illegal” and denounced the island’s inclusion on the list of state sponsors of terrorism.
Former U.S. President Donald Trump included the island nation on the U.S. list of state sponsors of terrorism, and though the Biden administration has reversed other Trump-era measures, it has so far not removed Cuba from the list.
“Cuba has been an advocate of fairer global governance. And to this day it is the victim of an illegal economic embargo,” Lula said in a speech opening the G77 Summit of developing nations in the capital, Havana. “Brazil is against any unilateral coercive measure. We reject Cuba’s inclusion on the list of states sponsoring terrorism.”
The comments were made just hours before Lula left for New York, where he will attend the United Nations General Assembly and have bilateral talks with Biden.
Earlier, Cuba expressed concerns over the label and Washington’s decades-old Cold War-era economic embargo against the island governed by the Communist Party of Cuba. The 27-member European Union, the country’s top trade partner, has also repeatedly rejected trade embargo. Cuba and critics of the economic sanctions say the embargo prevents and hampers access to food, medicine and other critical development supplies.
The U.S. State Department did not immediately respond to a request for comment on Lula’s remarks.
The Biden administration has previously said U.S. law includes exemptions and authorizations for exports of food, medicine, and other humanitarian goods to the island.
During the Assembly, Brazil is expected to return to its historic position of condemning the embargo on Cuba, one of the motions that is usually voted on every year at the United Nations and passes overwhelmingly. In 2019, during the first year of right-wing Jair Bolsonaro’s administration, Brazil voted against the motion along with the United States and Israel.
Lula also used his speech to call once again for the investment promised by developed countries to reduce the impact of climate change, as established in the Paris Agreement, but which has not been fulfilled. The president said that developing countries do not have the same “historical debt” as the rich for global warming.
“The principle of common but differentiated responsibilities remains valid. That is why all developing countries must be guaranteed climate funds, according to their needs and priorities,” he said.