Goldman pivots, now forecasts Fed rate hike in October

Goldman Sachs revised its interest-rate outlook and now anticipates the Federal Reserve will raise its benchmark rate again in October, reversing an earlier call for a September hike followed by a pause. The change follows the Fed's Wednesday decision to lift rates by 25 basis points to a 3.75%–4.00% target range and officials' projections showing most policymakers expect at least one more increase this year.

By AI Newsroom· Reviewed by Pranav, Founder & Editor-in-ChiefPublished about 14 hours agoUpdated about 2 hours ago0 views

Goldman pivots, now forecasts Fed rate hike in October

Why It Matters

The adjustment from a major Wall Street bank signals shifting expectations for the path of U.S. monetary policy after the Fed's latest move and guidance, which could influence market pricing and investor positioning. That shift is already reflected in futures markets and in near-term asset price moves.

Key Facts

Goldman Sachs forecast change: Now expects Fed to hike in October, reversing prior call for a September increase then a pause
Fed rate move: Raised rates by 25 basis points to a 3.75%–4.00% target range
Fed officials' projections: A strong majority of policymakers expect at least one more increase this year
Fed chair remark: Chair Kevin Warsh said inflation remains 'too high' and the latest hike removed a 'dose of accommodation'
Market odds: Traders price just over a 50% chance of another 25 bps hike in October per CME FedWatch

Goldman Sachs has altered its expectations for the Federal Reserve's policy path, now predicting an additional rate increase in October after previously forecasting a September hike followed by a pause. The bank's pivot comes in the wake of the Fed's most recent decision to raise its benchmark federal funds rate by 25 basis points to a target range of 3.75%–4.00%.

The Fed's updated projections accompanying the rate decision showed that a sizable majority of policymakers anticipate at least one more rate rise this year. At the post-meeting press briefing, Fed Chair Kevin Warsh characterized the committee's stance as hawkish, saying inflation remains "too high" and that the latest quarter-point increase merely removed a "dose of accommodation," suggesting policy is not yet restrictive enough.

Market pricing has shifted alongside policymakers' guidance and Wall Street forecasts. According to the CME FedWatch tool, traders were placing just over a 50% probability on another 25-basis-point increase in October. Those odds align with Goldman Sachs' revised call for an additional hike later this year.

Risk assets showed limited movement following the developments: bitcoin was trading near $76,260, up about 0.5% on a 24-hour basis as of the report. The combination of Fed commentary, official projections, and adjustments from major financial firms has sharpened attention on the timing and extent of further tightening.