The Federal Reserve may be less aggressive in raising interest rates next year, but US economic strength will give policymakers reason to stay the course in tightening monetary policy, according to Goldman Sachs.

The investment bank, one of the more hawkish on Wall Street, had been projecting a total of four rate rises in 2019 — even higher than the Fed’s own forecast to increase its benchmark short-term rate three times. Goldman Sachs now believes the chances that policymakers lift rates in March are “slightly below” 50 per cent. The pause would come at a time of heightened tariff uncertainty, given that a 90-day truce in the US-China trade spat ends March 1.

Still, the outcome of the Fed’s March meeting is a “close call” because there are “good arguments” for increasing rates, Goldman Sachs chief economist Jan Hatzius said. He noted that fiscal stimulus remains a key driver for the economy, while recent data such as job and wage gains in November were “hardly weak.”