March Madness: Goldman Sachs Predicts No Rate Hike in March

It looks like the FED is about to end the month of March with a whimper rather than a bang, according to the latest prediction from Goldman Sachs. Analysts at the Wall Street giant have concluded that it is unlikely the Federal Reserve will raise the federal fund’s rate at its March meeting, citing stress in the US banking system.

A Sign of a Slowing Economy?

The US economy has been largely slowing down over the past few weeks; this latest news from Goldman Sachs simply confirms that fact. Last month, the US added just 20,000 jobs – the lowest figure in over a year; this left many economists scratching their heads and questioning the state of the economy. With no rate hike in March, the FED is hoping to give the economy the stimulus it needs.

What Could Impact US Banks?

While there’s plenty of speculation as to why the US banking system is in stress, there are a few tangible factors that could be responsible. Here are just a few of the things that may be affecting US banks:

  • Trade War Uncertainty: The ongoing trade war is causing confusion in the markets and making it difficult for investors to commit funds.

  • Rising Interest Rates: As the FED funds rate rises, banks may struggle to find new investments to match those rising rates.

  • Brexit Uncertainty: With Brexit in the news almost every day, it’s uncertain how the UK’s exit from the EU will affect US banks.

What Does This Mean for Consumers?

Not good news, unfortunately. With no rate hike in March, the probability of lower borrowing costs is almost zero. This means that consumers, who rely heavily on borrowing, will be left in the lurch with no respite from higher loan rates. On the brighter side, the stock market tends to move in the opposite direction of the FED’s rate hike, so we could see a bump up in markets if the rate remains the same.

Final Thoughts

At the end of the day, no one knows what will happen with the FED in March – or any other month. All we can do is wait and see how events like the UK’s exit from the EU or the US-China trade war play out. In the meantime, a little patience and prudence can go a long way in helping you stay afloat (and sane) during these uncertain times.