Goldman Sachs has updated its forecast, anticipating a 25 basis point increase in interest rates from the Federal Reserve next month.
In a notable shift from its earlier predictions, Goldman Sachs now expects the Federal Reserve to raise its benchmark interest rate in October, following a recent increase of 25 basis points that set the target range to 3.75%–4.00%. Previously, Goldman had forecasted a September hike followed by a pause.
The change in outlook aligns with the Fed's recent decision and its hawkish tone articulated by Chair Kevin Warsh, who indicated that inflation remains "too high" and that further rate increases may be necessary to tighten monetary policy.
Market analysts currently estimate a probability of just over 50% for a 25 basis point hike in October, based on data from the CME’s FedWatch tool. This reflects growing expectations for continued tightening as the Fed aims to combat inflation.
