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The
latest forecast comes about a week after the U.S. Federal
Reserve rolled out its biggest rate hike since 1994 to stem a
surge in inflation and as several other central banks also took
aggressive steps to tighten monetary policy.
Goldman Sachs also downgraded its U.S. GDP estimates below
consensus for the next two years to reflect the drag on the
economy.
"The Fed has front-loaded rate hikes more aggressively, terminal
rate expectations have risen, and financial conditions have
tightened further and now imply a substantially larger drag on
growth — somewhat more than we think is necessary," Goldman's
economists said in a note from late-Monday.
Goldman Sachs forecast a 25% conditional probability of the
United States entering a recession in 2024 if it avoids one in
2023, adding that this meant that there was a 48% cumulative
probability of a recession over the next two years compared to
its prior forecast of 35%.
"We are increasingly concerned that the Fed will feel compelled
to respond forcefully to high headline inflation and consumer
inflation expectations if energy prices rise further, even if
activity slows sharply." it added.
(Reporting by Pushkala Aripaka and Siddarth S in Bengaluru;
Editing by Shailesh Kuber)
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