Goldman Sachs Expects Fed to Hike Rates in September

Goldman Sachs has reversed its forecast and now expects the U.S. Federal Reserve to raise interest rates by 25 basis points at its September meeting, a shift driven primarily by market pricing rather than a significant change in its economic outlook. The investment bank's revised call, detailed in a note on September 13, joins a growing consensus among Wall Street firms that the Fed will tighten policy at its gathering on September 15-16. The change in forecast comes after August inflation data showed core consumer prices rose 0.3% month-on-month, hotter than the 0.2% consensus. This data, combined with a surge in oil prices above $100 a barrel, has rekindled concerns about persistent inflation. Markets are now pricing in an approximately 87% probability of a quarter-point rate hike at the September meeting, according to the CME FedWatch Tool. Goldman Sachs stated that holding rates steady while markets expect a hike could itself unsettle investors. "The report has not changed our fundamental inflation view," the bank's economists said in the research note. "However, we now expect the FOMC to deliver a 25 basis point increase at the September meeting." The bank's chief U.S.