According to Goldman Sachs strategists in a daily note on Thursday, the US Federal Reserve will likely double the pace of tapering its monthly bond purchases from January to $30 billion, and wind down its pandemic-era bond-buying scheme by mid-March.
"The increased openness to accelerating the taper pace likely reflects both somewhat higher-than-expected inflation over the last two months and greater comfort among Fed officials that a faster pace would not shock financial markets," analysts led by Jan Hatzius said in a client note.
Despite the accelerated tapering schedule, Goldman expects the Fed to begin raising interest rates in June and to do so three times in 2022. The American investment bank is one of several banks that have recently increased their interest rate hike expectations for 2022 from two to three.
According to the minutes of the central bank's Nov. 2-3 policy meeting, various policymakers stated that if high inflation persists, they would be willing to accelerate the taper of their bond-buying program and raise interest rates more quickly.