Fed Rate Hike Expected This Week Amid Strong Inflation Data

The US Federal Reserve is expected to raise interest rates this week after recent inflation readings showed stronger-than-expected price pressures. Goldman Sachs and JP Morgan have joined a growing number of forecasters who now anticipate a rate hike, with Goldman Sachs specifically predicting a 25-basis-point increase at the Fed's Sept 15-16 meeting.

Data released last week revealed that US consumer and producer prices rose more than expected in August, while oil prices climbed above $100 per barrel due to renewed hostilities in the Middle East. This has revived concerns that progress toward the Fed's 2% inflation target could stall after months of moderation.

JMorgan forecasts quarter-point hikes in both September and December, with its economists citing rising bond yields and energy prices as contributing factors. The latest data have also led Goldman Sachs to revise its forecast for two Fed rate cuts in 2027, pushing them back later than previously anticipated.