US Interest Rates Will Rise Sooner Than Previously Expected, Many Economists Now Say

Goldman Sachs chief economist Jan Hatzius told clients Sunday that he expects the U.S Federal Reserve to hike interest rates by the third quarter of 2015, earlier than his previous prediction of 2016's first quarter, and said he based his forecast on last week's better-than-expected employment report.

“We remain quite confident that the U.S. economy is accelerating to an above-trend pace. The acceleration is most visible in the labor market. The inflation numbers have also surprised on the upside over the past few months,” Hatzius wrote to Goldman clients.

Bloomberg also quoted Belgium-based KBC Bank NV's research chief Piet Lammens saying, “We might see more U.S. banks bringing forward their rate-hike expectations this week. It was an important jobs report. It may be that we get more losses for Treasuries and higher yields today.”

U.S. hiring picked up pace last month, adding more jobs to the economy than expected.

The monthly snapshot of the U.S. job market released by the Department of Labor Friday was cause for modest celebration: 288,000 more jobs were added to the economy in June, reducing the unemployment rate by one-fifth of a percentage point to 6.1 percent.