Goldman Sachs The Markets
What the latest inflation data means for markets, the Fed, and investors’ portfolios
Jan 12, 2024
Alexandra Wilson-Elizondo, Co-Chief Investment Officer of Multi-Asset Solutions in Goldman Sachs Asset Management, discusses the implications of the latest US inflation data and its impact on the Federal Reserve's rate cuts. The podcast also explores the key drivers of market volatility, valuations, and previews earnings. Rate cuts may start in the middle of the year with a more balanced approach from the Fed.
07:49
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Quick takeaways
- A pickup in US inflation may delay the Federal Reserve's rate cuts, challenging the expectation of cuts in Q1.
- Goldman Sachs Investment Officer predicts rate cuts in the middle of the year due to a balanced approach to growth and inflation.
Deep dives
Higher than expected inflation challenges market expectations of rate cuts
The Consumer Price Index report for December revealed inflation at 3.4%, slightly higher than estimates. This challenges the market's belief in rate cuts starting in the first quarter. However, the core inflation rate was in line with expectations. Despite the higher inflation, the Federal Reserve Chair Powell has the flexibility to go in either direction in terms of monetary policy. Wage data and claims coming down suggest that the Fed may cut rates later in the year, rather than in the first quarter.
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