Jay Powell may have been appointed to the head of the Federal Reserve by Donald Trump, but this does not mean he is of a piece with the president of the United States. Perhaps you realized this at some point during Trump’s campaign to undermine a man he’d called “strong, committed and smart” less than a year earlier. For Goldman Sachs, it was something else: The bank that understands this administration better than any other has begun to suspect that Powell lacks several key attributes of the true Trumpian, such as toeing the dear leader’s line no matter how insane, or at least pretending you never heard such a line, and contempt for all other branches of government.
Most notably, Goldman has come to the uncomfortable conclusion that Jay Powell may not be a facile congenital liar. Indeed, it just about believes him and his colleagues when they say they’re only gonna hike interest rates three times next year, when up until now those with a direct line to the man upstairs (not Trump himself, but the author of his second-favorite book) are slightly inclined to believe them.
"December is still very likely (in our view 90%). However, we think the probability of a move in March has now fallen to slightly below 50%," he added.
Until the change, Hatzius had the most aggressive Fed call on Wall Street, with four quarter-point increases likely in 2019. That was even more hawkish than the current forecast of three hikes from officials on the Federal Open Market Committee, which sets rates for the central bank and announces its next decision on Dec. 19.