Why Goldman Sachs thinks the Fed won’t be hiking interest rates in September

Why Goldman Sachs thinks the Fed won’t be hiking interest rates in September U.S. inflation data have softened in the last few months, lowering the odds of a rate increase next month After materially softer jobs and inflation data in the last few months, Goldman Sachs economists doubt enough members of the Federal Open Market Committee will shift toward a hawkish stance ahead of the next rate decision during their Sept. 15-16 meeting to prompt a rate hike. Barring any surprising or dramatic August data releases in early September, the Fed will stand pat, the team said. The Goldman call came from its chief economist Jan Hatzius in an Aug. 16 note, in which he forecast that “inflation news is more likely to improve further than to deteriorate anew as the year progresses. Hence we think the market pricing for the funds rate FF00 is too hawkish.” The chances of a 25-basis-point rate increase are about 30%, according to CME FedWatch. About the Author Jules Rimmer is a markets reporter in London. Rimmer spent more than 30 years as a trader and stockbroker, starting at Salomon Brothers in the “Liar's Poker” era, taking in ING Barings, Jefferies and ending it in emerging markets at Investec. He hung up his headset and pivoted to journalism in 2021.