Goldman Sachs Joins Wall Street Consensus: September Rate Hike Ahead

Goldman Sachs has shifted its stance on interest rates, now predicting a 25 basis point rate hike in September.

This change comes after the release of August's CPI data, which showed core inflation rose 0.3% month-on-month, exceeding market expectations.

The bank's Chief U.S. Economist David Mericle stated that the shift is not due to a reassessment of the inflation situation, but rather concerns about the Federal Reserve's credibility.

Mericle noted that Federal Reserve Chair Waller's hawkish remarks at the Jackson Hole meeting have guided market expectations that if inflation data is not perfect, then a rate hike will occur.

Goldman Sachs believes that even a single 25 basis point rate hike would have a limited actual impact on the economy.