Goldman Sachs: Referring to the 1990 oil crisis, the Fed will eventually cut interest rates.

Sina Finance news on March 31st, with the Middle East conflict escalating oil prices and fueling inflation concerns, there has been a dramatic "hawkish repricing" in the global interest rate market recently - the market has shifted from betting on multiple rate cuts by the Federal Reserve at the beginning of the year to pricing in rate hikes by the end of the year. Goldman Sachs is questioning one of the most significant market repricings this year. The bank stated that investors have overestimated the possibility of the Federal Reserve raising rates in response to the current surge in oil prices. Dominic Wilson, a strategist at Goldman Sachs, outlined the bank's views in a research report: the market has overreacted to the oil shock, betting that the Federal Reserve will adopt a tightening policy, but based on historical experience, this is unlikely to happen. The key reference for Goldman's assessment this time is the year 1990. When faced with an oil supply shock that year, bond yields soared, and investors bet that the Federal Reserve would tighten policy. However, in the end, the Federal Reserve did the opposite and chose to cut rates as the economic situation deteriorated. The core logic of Goldman Sachs is that the inflation surge driven by oil prices is a supply-side shock, not a demand-side overheating. Historically, the Federal Reserve has tended to ignore supply-side inflation pressures and will not tighten monetary policy as a result. This tendency becomes more evident when the economic growth is already slowing.