Goldman Sachs sees low chance of Fed rate hike this year

Goldman Sachs analysts said in a report that while market pricing for the U.S. federal funds rate shifted rapidly after the outbreak of war with Iran, the probability of a rate hike this year remains low. They explained that the current supply shock is small and more limited than past shocks that triggered inflation, and the rise in oil prices is less significant than in the 1970s. The analysts added that the economy's starting point reduces the likelihood of widespread inflation, and the current monetary policy stance also lowers the chances of a rate hike. They emphasized that the Federal Reserve does not typically implement tightening policies based on oil shocks alone.