Goldman Sachs and JPMorgan Predict Fed Rate Hike This Week
Major banks including Goldman Sachs, JPMorgan, HSBC, and Deutsche Bank now anticipate a Federal Reserve rate hike during its September meeting. The shift follows stronger-than-expected inflation data and rising oil prices due to Middle East tensions. These developments have increased the market probability of a rate increase from around 67% before last week's data to approximately 89%. Analysts suggest that recent economic indicators, particularly in core price measures and energy costs, are compelling the Fed to act decisively on inflation control. Goldman Sachs has revised its outlook for two rate cuts in 2027 but now sees this week’s hike as a response to market dynamics rather than underlying inflation trends. JPMorgan raised its long-term policy rate estimate to 3.25%, while HSBC cited the lack of progress on inflation as tipping the balance toward tighter monetary conditions. The Fed has kept rates unchanged all year, following a quarter-point cut at the end of 2025.
Topics: Fed Rate Hike Inflation Data Market Expectations Oil Prices