Saturday, July 2, 2011

Goldman Sachs: Forecasts for the Major Central Banks Rates

Goldman Sachs, the fifth-biggest US bank, tends to hire economists who have experience at the world’s major central banks: it employed Naohiko Baba from the Bank of Japan  in January and Huw Pill from the European Central Bank in May, while yesterday it recruited Bank of England economist Andrew Benito.

Such strategy means that the bank values the skills economists gather working in policy-making at the time when growth in advanced economies is struggling to gain momentum.

The central banks, in their turn, apply to Goldman when they are seeking for top managers. The latest example is former GS vice chairman Mario Draghi who is taking up a position of ECB president in November.

So, one may expect Goldman’s forecasts concerning the interest rates to be accurate enough. Here are the main of them:

  • The Bank of England is expected to raise the borrowing costs from the current 0.5% level in November, though there are risks of delay due to the Britain’s economic weakness:
  • The ECB is thought to increase its benchmark rate from 1.25% to 1.75% by the end of the year and then give another 75 basis point-lift next year.
  • The Federal Reserve and the bank of Japan are seen to leave borrowing costs at about zero through 2012.

writed by FBS Holdings © 2011