Goldman Sachs economists now expect the Federal Reserve to raise interest rates by 25 basis points at the end of its two-day policy meeting on Sept. 16, reversing their previous forecast for no change. According to a report cited by PANews from Cailian Press, the shift came after U.S. consumer price index data released in New York on Friday morning came in above market expectations. Following that release, market pricing showed the probability of a September rate hike rising to about 90%.
David Mericle, Goldman Sachs' chief U.S. economist, wrote in a Friday research note that the bank now expects next week's September Federal Open Market Committee, or FOMC, meeting to deliver a 25 basis point increase. He said the CPI report only slightly raised the firm's August core PCE forecast to 0.26% and did not alter its core inflation view. Still, he said Goldman believes the Fed may prefer to avoid leaving rates unchanged when markets have already priced the odds of a September move at close to 90%, because that could trigger sharp market volatility.
Goldman Sachs economists now expect the Federal Reserve to raise rates by 25 basis points at the end of its two-day policy meeting on Sept. 16, according to a Cailian Press report cited by PANews. The bank had previously expected the Fed to leave rates unchanged.
The change in Goldman Sachs' rate forecast followed U.S. consumer price index data released in New York on Friday morning that came in above market expectations. After the data was released, market pricing showed the probability of a September rate hike climbing to about 90%.
In a research note published Friday, Goldman Sachs chief U.S. economist David Mericle wrote: "We now expect next week's September FOMC meeting to raise rates by 25 basis points (previously: no change). While this CPI report only modestly raised our forecast for August core PCE to 0.26%, and did not change our core view on inflation, we think that with markets already pricing the probability of a September hike at close to 90%, a decision by the Fed to stand pat would likely trigger significant market volatility, which the FOMC would want to avoid."
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