Goldman Sachs and J.P. Morgan switch their Fed forecasts to a rate rise this week
Goldman Sachs and J.P. Morgan now forecast that the US Federal Reserve raises rates this week, a change analysts attributed to inflation data above forecasts and to oil above 100 dollars a barrel. Goldman forecasts a 25 basis point increase on September 15-16 and keeps its call for 2 cuts in 2027; J.P. Morgan forecasts 25 basis point rises in September and December and lifts its long-run rate estimate to 3.25 per cent. Quartz reports HSBC and Deutsche Bank sharing that call.
Economics & Markets··Midday
Goldman reverses its call for an unchanged rate
Goldman Sachs now predicts that the Federal Reserve, the US central bank, raises its policy rate by 25 basis points at the September 15-16 meeting, a turn from the bank's previous call. Analysts attributed the change to inflation data that came in above forecasts and to oil climbing above 100 dollars a barrel. Goldman keeps its call for 2 rate cuts in 2027. According to the FedWatch tool of the Chicago Mercantile Exchange (CME), markets price an 87 per cent chance of a rise this month, up from 70 per cent before the latest inflation data.[1]
J.P. Morgan pencils in two rises and a higher long-run rate
J.P. Morgan goes a step further than Goldman: it forecasts 25 basis point increases at both the September and the December meetings and raises its estimate of the long-run policy rate to 3.25 per cent. Goldman's own path stops at one increase this week, and the bank still forecasts 2 cuts in 2027. Both banks' changes followed the inflation data that came in above forecasts; the same data lifted the market-implied probability of a September increase on the CME FedWatch tool from 70 per cent to 87 per cent.[1]
HSBC and Deutsche Bank line up behind the same quarter-point call
Two more large banks hold the same view. Quartz, the business news site, reports that Goldman Sachs, J.P. Morgan, HSBC and Deutsche Bank all forecast a quarter-point increase at the Fed's September 15-16 meeting after inflation data came in hotter than forecast. Market pricing on the CME FedWatch tool points the same way: the probability of a rise stood at 70 per cent before the inflation figures and now stands at 87 per cent. The Fed meets on September 15-16.[2], [1]
