Goldman Sachs Switches to 25bp Fed Hike Call for September

Key Facts

Goldman Sachs has changed its call for the Federal Reserve's September meeting and now expects a 25-basis-point increase when the meeting concludes on September 16, reversing its previous forecast for no change. The projection is a research view, not a decision by the Federal Open Market Committee.

The shift followed the August consumer-price report. Official data showed headline CPI rising 0.4% from the previous month and 3.4% from a year earlier, while core CPI increased 0.3% monthly and 2.4% over 12 months.

The revision is notable because Goldman Sachs was forecasting in July that rates would remain unchanged through 2026. Reports describing the new note say the bank now expects a limited increase even though the release did not materially alter its underlying inflation view.

At its previous meeting, the Fed held the target range at 3.50%-3.75% in a 9-3 vote. The three dissenters favored a 25-basis-point increase, showing that tighter policy was under consideration before the August data were released.

A 25-basis-point move would lift the target range from 3.50%-3.75% to 3.75%-4.00%. That could make equities and other risk assets more sensitive to yield moves, although the lasting impact would depend on the Fed's inflation assessment and its signals about subsequent decisions.

The Fed meets on September 15-16 and is scheduled to hold a press conference afterward. Investors will examine the policy statement and the chair's remarks for evidence of whether any increase is a one-off move or the start of a broader tightening path.