by Calculated Risk on 3/13/2016 12:47:00 PM

A few excerpts from a research piece by Goldman Sachs economists Zach Pandl and Jan Hatzius: March FOMC Preview

At its meeting in late January, the FOMC suspended its normal balance of risks assessment over concerns about tighter financial conditions and downside risks to growth. Although policymakers continue to express some caution about the outlook, financial conditions have eased considerably over the last month, and incoming data have held up reasonably well.

We do not think the committee is ready to raise rates next week, but expect the statement to say that risks are “nearly balanced”. Guidance from the meeting in general should indicate that another rate hike is likely before too long—we expect an increase at the June 14-15 FOMC meeting, but action at the April 26-27 meeting is not inconceivable.
...
Beyond next week’s meeting, we think markets may be underestimating Fed officials’ tolerance for tighter financial conditions over time. In fact, we expect that financial conditions will need to tighten moderately over the next year to bring employment growth to a trend pace, which probably requires a steeper funds rate path than currently priced in the bond market.
emphasis added