Goldman Sachs Sees Another Rate Hike in October as Warsh Signals Tightening

Goldman Sachs has revised its prediction for US Federal Reserve rate hikes, now forecasting another increase in October. This shift comes after Fed Chair Kevin Warsh signaled a tightening of monetary policy during his press conference on Wednesday.

The central bank raised rates by a quarter point to a 3.75%-4.00% range on Wednesday, with Warsh describing the hike as 'removing a dose of accommodation.' This implies that policy is still not restrictive enough to curb inflation, which remains 'too high' according to Warsh.

The Fed's projections point to further tightening, with 16 out of 18 officials expecting at least one more hike this year and four policymakers forecasting two additional increases. The dot plot signaling prolonged high interest rates has surprised markets, pushing Treasury yields up and equities down.