Goldman Sachs and JPMorgan Lead Wall Street to Predict September Rate Hike
Two major banks, Goldman Sachs and JPMorgan, have strengthened their call for a Federal Reserve interest rate hike in September. According to Traders Union, Goldman Sachs now expects a 25-basis-point increase in rates this week, while JPMorgan forecasts quarter-point hikes in both September and December.
The change in outlook follows stronger-than-expected August consumer and producer inflation readings, which have raised concerns that bringing inflation down to 2% may require a more restrictive policy stance than previously anticipated. Oil prices have also climbed above $100 a barrel due to the Middle East conflict disrupting supply routes and increasing uncertainty around crude availability.
Markets are pricing in an 87% probability of a quarter-point September increase, up from roughly 70% before the latest inflation reports. Goldman Sachs does not view a September hike as the beginning of an extended tightening campaign, but rather sees it as a limited adjustment to address persistent inflation concerns.