Goldman Sachs Shifts Outlook, Now Expects Fed Rate Hike in October

Goldman Sachs now expects the Federal Reserve to deliver another 25-basis-point rate hike in October, pointing to the central bank’s latest projections as evidence of a more hawkish near-term policy outlook.

The investment bank has reversed its previous forecast, which called for a September rate increase followed by a pause. Its latest view instead sees another hike coming at the Fed’s October meeting.

The change follows Wednesday’s 25-basis-point increase, which lifted the Fed’s target range to 3.75%–4.00%. Updated projections from policymakers showed that a clear majority anticipate at least one additional rate increase before the end of the year.

Fed Chair Kevin Warsh also adopted a hawkish stance during the post-meeting press conference. He said inflation remains “too high” and described Wednesday’s move as simply removing a “dose of accommodation,” suggesting monetary policy may not yet be restrictive enough and leaving the door open to further increases.

Market pricing currently puts the probability of another 25-basis-point hike in October at slightly above 50%, according to the CME FedWatch tool.

Bitcoin was trading near $76,260 at the time of writing, representing a gain of about 0.5% over the previous 24 hours.