Global Banks Unite Behind Fed Hike Call Amid Inflation Fears

Global banks are increasingly calling for the Federal Reserve to raise interest rates this week in response to stronger-than-expected inflation readings. The shift marks a sharp turnaround from earlier this year, when many economists expected the Fed to remain on hold.

Data showing U.S. consumer and producer prices rose more than expected in August, combined with oil prices climbing above $100 a barrel amid renewed hostilities in the Middle East, has raised concerns that inflation pressures could remain elevated.

Goldman Sachs, J.P. Morgan, HSBC, and Deutsche Bank are among those forecasting a quarter-point hike at the Fed's September 15-16 meeting, with several expecting rates to stay higher for longer to bring inflation back to its 2% target.

J.P. Morgan struck a hawkish tone following the inflation reports, saying the latest data cast doubt on a sustained disinflation trend and leading it to forecast another Fed rate hike this year and raise its estimate of the long-run policy rate to 3.25%.