(Bloomberg) -- Goldman Sachs Group Inc. economists raised their forecast for peak Federal Reserve rates to 5.5%-5.75% following hawkish testimony by Chair Jerome Powell that opened the door to a half percentage-point increase later this month.

“We expect the data ahead of the March meeting to be mixed but firm on net, and we therefore see our standing forecast of a 25 basis point hike in March as a close call, with some risk that the FOMC could hike by 50 basis points instead,” the economists led by Jan Hatzius wrote in a note to clients following Tuesday’s hearing before the Senate Banking Committee. “We now expect that the median dot in the March Summary of Economic Projections will rise by 50 basis points to a peak of 5.5%-5.75% in 2023.”

The Federal Open Market Committee meets March 21-22, when officials will update quarterly forecasts that in December showed rates peaking in a 5%-5.25% range, according to the median projection. But data in January came in hotter than expected and Powell cautioned lawmakers that this suggests the rate peak is likely higher than previously thought and officials would be ready to increase the pace of rate increases if needed.

Investors increased bets the Fed would move by a half point later this month following Powell’s remarks.

“Even if FOMC participants decide on a 25 basis point hike in March but are split on the pace, they might compromise by engineering a 50 basis point increase in the peak funds rate shown in the dot plot,” the Goldman economists wrote.

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