Goldman Sachs said Democratic control of both Georgia Senate seats could pull forward the timeline for a Federal Reserve rate hike.

The bank’s economics research team wrote Wednesday that they now expect the Fed to lift off from near-zero interest rates in the second half of 2024 instead of its previous forecast of early 2025.

“We now expect the Fed’s high inflation bar for the first rate hike to be met a bit earlier,” Goldman wrote.

With Democrats Jon Ossoff and Raphael Warnock set to replace their incumbent GOP challengers, the Senate will have a 50-50 balance with Vice President-elect Kamala Harris as the tiebreaker.

Goldman said the results of Tuesday’s Georgia election will likely lead to another stimulus package in the first quarter of this year, which they estimate to be about $750 billion.

A substantial portion of that package could be the $2,000 stimulus checks that Sen. Chuck Schumer (D-N.Y.) says will be a top priority once he becomes Senate Majority Leader.

The prospects of a fresh round of relief pushed Goldman to upgrade its expectation for GDP growth in 2021, from an already-above-consensus 5.9% to 6.4%. Faster economic growth, the note adds, would then lead to lower unemployment and a tilt up in inflation, high enough to reach the Fed’s standards for a rate hike.

The Fed itself has projections for where interest rates could go in the coming years, but its forecast horizon only extends as far as the end of 2023. The Federal Open Market Committee (FOMC) signaled in December that rates would likely stay at near-zero through then.

But the central bank could begin tightening policy before moving on rates.

The Fed is currently committed to at least $120 billion in asset purchases each month, but some policymakers are already starting to think about strategies for tapering the so-called quantitative easing program.

Philadelphia Fed President Patrick Harker said Thursday that slowing the pace of purchases could begin at the very end of 2021 or the beginning of 2022.

“But it is all going to depend on the course of the economy,” Harker said.

Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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