Goldman Sachs Slides Rate Hike Forecast to December Amid Weaker Inflation

Goldman Sachs has pushed back its forecast for the next US interest rate hike to December, citing softer-than-anticipated inflation data. The brokerage had previously predicted a 25-basis-point increase in October but now sees this as less likely.

The Fed raised rates in September for the first time in three years, and economists polled by Reuters estimated that inflation would rise 3.7% on an annual basis in August, but it actually increased to 3.4%. This has cooled expectations of another rate hike soon.

Rate futures markets now reflect a 38% probability of a quarter-percentage-point rate hike in October, down from nearly 71% a week ago. The crucial US nonfarm payrolls report for September is due on Friday and will be closely watched by market participants.