The Fed is likely to raise rates by 25 basis points in October, Goldman said, drawing attention to Fed's own hawkish near term rate projections.
- Goldman Sachs now expects the Federal Reserve to raise interest rates again in October.
- The Fed raised its benchmark rate Wednesday and Chair Kevin Warsh struck a hawkish tone.
Goldman Sachs now expects the Federal Reserve to raise its benchmark interest rate again in October, a 180-degree pivot from its earlier call for a September hike followed by a pause.
The shift comes after the Fed on Wednesday lifted rates by 25 basis points to a 3.75%–4.00% target range. The central bank’s updated rate projections revealed a strong majority of policymakers expecting at least one more increase this year.
At the post-meeting press conference, Fed Chair Kevin Warsh struck a hawkish tone, saying inflation remains “too high” and that the latest hike merely removed a “dose of accommodation,” implying policy is still not restrictive enough and more rate hikes may be in the pipeline.
As of this writing, traders are pricing just over 50% chance of another 25 basis points hike in October, according to the CME’s FedWatch tool.
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