Fed Set to Hike Rates Amid Rising Inflation Concerns
The US Federal Reserve (Fed) is likely to raise interest rates this week in response to stronger-than-expected inflation readings, according to Goldman Sachs and JP Morgan.
Last week's data showed US consumer and producer prices rose more than expected in August, while oil prices climbed above $100 a barrel due to the hostilities in the Middle East.
Goldman Sachs abandoned its previous call for rates to remain unchanged and now expects a 25-basis-point increase at the Fed's meeting this week. JP Morgan forecasts quarter-point hikes in both September and December.
The latest data have revived concerns that progress towards the Fed's 2% inflation target is being threatened, with Goldman Sachs economist David Mericle saying the Federal Open Market Committee (FOMC) will be 'reluctant to surprise'.