Brokerages Turn Hawkish on Fed Rate Hike Bets Amid Sticky Inflation

A growing number of major brokerages expect the Federal Reserve to raise interest rates this week following stronger-than-expected inflation data. The shift in expectations comes after US consumer and producer prices rose more than expected in August, casting doubt on whether price pressures can ease without further monetary tightening.

Goldman Sachs, J.P. Morgan, HSBC, and Deutsche Bank are forecasting a 25-basis-point rate increase at the Fed's September 15-16 meeting. Several of these brokerages also expect interest rates to remain elevated for longer as policymakers seek to bring inflation back to the central bank's 2% target.

The outlook for further monetary tightening will be a key focus when Fed policymakers conclude their meeting on Wednesday. Investors will also monitor the Bank of Japan for signals on its own interest-rate policy.