Goldman Sachs flips forecast, now sees September Fed rate hike By Reuters
Goldman Sachs flips forecast, now sees September Fed rate hike
Goldman Sachs has revised its outlook for the Federal Reserve’s September policy meeting, now projecting a 25‑basis‑point increase in the benchmark interest rate. The change puts the bank in line with an expanding group of Wall Street analysts who argue that lingering inflation pressures will require additional tightening.
Reversal of Earlier Call
In a research note released on Friday, Goldman Sachs disclosed that it had abandoned its earlier expectation that the Fed would hold rates steady. The firm explained that the adjustment reflects how market participants are pricing a strong likelihood of a hike, and that policymakers are unlikely to catch investors off guard by pausing the tightening cycle.
Market Pricing Drives Shift
Goldman Sachs emphasized that the new stance stems mainly from the way futures and options markets are valuing the probability of a rate move, rather than from a fundamental overhaul of its macroeconomic assumptions. The bank added that the recent climb in crude oil prices may persuade some Fed officials to favor further rate increases.
Inflation Data and Oil Prices
The updated forecast arrives amid fresh data that showed U.S. producer prices rising faster than analysts had anticipated, while crude oil breached the $100‑per‑barrel threshold. Both developments have revived concerns that price pressures remain elevated, prompting investors and a number of brokerage houses to increase their bets on more aggressive monetary policy.
Probability of a September Hike
Current market pricing suggests an 87 percent chance that the Fed will deliver a quarter‑point hike at its September gathering, a notable rise from the roughly 70 percent probability that existed before the latest data releases. The CME Group’s FedWatch Tool also indicates that market participants are looking for another rate increase in December.
Outlook for the Rest of the Year
Goldman Sachs’ shift underscores the uncertainty that still surrounds the Fed’s path forward. While the bank’s economic outlook has not dramatically changed, the combination of stronger producer‑price figures and higher oil costs has nudged its forecast toward a more hawkish stance. Investors will be watching the September decision closely, as it will set the tone for any further moves later in the year, including the anticipated December adjustment.
Broader Market Implications
The alignment of Goldman Sachs with other major financial institutions on a September hike signals that the consensus on monetary tightening is solidifying. Should the Fed follow through with the projected increase, borrowing costs for consumers and businesses are likely to rise, influencing everything from mortgage rates to corporate financing. Market participants will continue to monitor inflation indicators and commodity price trends for clues about the central bank’s next steps.
Source: investing.com · 2026-09-14