INTEL: Goldman Sachs expects just one more Fed rate hike versus three priced in by markets

Goldman Sachs expects just one more Federal Reserve rate hike, while markets currently price in three, Bloomberg reported. The bank’s view suggests the current tightening cycle could be among the smallest since 1983.

The gap between Goldman’s forecast and market pricing is two hikes. If the bank is right, the cycle would end well short of what traders now expect.

What past limited cycles did for stocks

Goldman strategist Vickie Chang pointed to how equities performed after earlier, limited tightening cycles. According to the report, the S&P 500 gained 34% in the year after the 1997 hike and 9% in the year after the 2015 hike.

Those two episodes are the historical comparisons cited for a possible stock market rally if the Fed stops after a small number of increases. The report as supplied does not give a timeline for the next hike or the current policy rate.