The Federal Reserve's efforts to bring inflation under control will be helped by global economic slowdowns and a surging dollar.
In a recent research note, the bank said that the tightening campaigns of international central banks will likely lead to a downturn but will also help to tame soaring prices.
"Global central banks are raising rates to fight inflation, prompting concerns that synchronised but uncoordinated policy tightening could unnecessarily raise the risk of a severe recession," said economist JosephBriggs. Slower foreign growth and dollar appreciation will cause drags on growth and inflation in the US.
The Fed has raised interest rates three times in a row in order to tame inflation.
Foreign investors have been attracted to the dollar by higher yields. Year-to-date, the US Dollar index has increased by 17.8%.
The risk of a global slowdown has increased as a result of other central banks hiking rates aggressively.
The bank said that US inflation will fall if the economy slows.
Lower global growth will likely create a small drag on US inflation because of softer import and oil prices.
The dollar's appreciation will make imports cheaper. 25% of the prices surveyed in the Personal Consumption Expenditures index are imported goods.
The recent dollar appreciation will lower core goods inflation by about half a percentage point and core PCE inflation by about a third.
Goldman says that it's not likely that the Fed will pause or end its campaign.
"Fed officials monitor the effects that foreign spillovers will have on the US economy, but spillovers are not large enough to meaningfully affect policy decisions."
In the past, the Fed has adjusted monetary policy in response to more severe foreign crises that threaten to spillover to financial conditions in the US. The Fed's response to past crises depends on the size of the threat they pose to the US economy and financial markets.
The Fed has the world in its hands, and it's making global economic chaos that could hurt the US.
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