(Bloomberg) — The Federal Reserve is on track to achieve a soft landing in the US economy, Goldman Sachs Group Inc.’s Chief Economist Jan Hatzius said, adding that a March interest rate cut “would make sense.”
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“The Fed is on its way to achieving the soft landing, obviously no guarantees, but I like what I’m seeing,” Hatzius told Bloomberg Television in an interview Tuesday in Hong Kong.
He said an easing by the Fed in March remains Goldman’s baseline as it would be consistent with the trajectory of consumer prices — and comments last month by Fed Chairman Jerome Powell that it would like to cut before inflation returns to 2%.
Read more: Powell Says Fed Is Just at Beginning of Policy Easing Talks
“We don’t think it’s essential that they cut here, but it would be consistent with the signaling,” Hatzius said. He noted that the labor market remains in solid shape, as “layoffs continue to be very, very low.”
The odds of a March rate cut have ebbed significantly in recent days to around 37%, as Fed officials have pushed back against market expectations of imminent and deep rate reductions this year.
Read more: Fed Officials Say Data Doesn’t Show It’s Time for a Rate Cut Yet
On China’s economy, Hatzius reckons the headwinds it’s facing have “a ways to run, the property adjustment is not yet close to done.”
Chinese policymakers are providing support to stabilize the economy and prevent growth from slowing too much, he said, “but at the same time they’re not willing to really use the bazooka to provide a very large amount of stimulus.”
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