(Reuters: Goldman Sachs has pushed back its projections by one year until July 2022 to account for the first U.S. interest rates hike after the Pandemic. This is because the bank believes inflation will continue to rise.

“The main reason for the change in our liftoff call is that we now expect core PCE inflation to remain above 3% — and core CPI inflation above 4% — when the taper concludes,” Goldman’s chief economist, Jan Hatzius, wrote in a client note.

Federal Reserve policymakers expect to announce that they will begin to taper the central bank’s monthly purchases of Treasuries (and mortgage-backed Securities) of $120 million at Wednesday’s end of the two-day policy session.

Hatzius stated that although there could be large surprises from the virus such as inflation, wage growth or inflation expectations, it is unlikely to prompt any revision. However, we believe the obstacle for making a shift in one direction is too high.

Goldman Sachs anticipates that there will be a second rate rise in November 2022 as well as two additional rate increases annually thereafter.

Fed fund futures were fully priced to reflect Friday’s inflation data. They will be tightened by quarter point by July 2022, and then increase their rates by December.