Goldman Sachs Revises Fed Rate Forecast, Now Expects October Hike
Goldman Sachs has executed a significant reversal in its Federal Reserve policy outlook, now projecting that the central bank will raise its benchmark interest rate once more in October. This new forecast marks a 180-degree pivot from the firm’s previous expectation of a September hike followed by an extended pause.
Fed Signals Further Tightening After September Increase
The shift follows the Federal Reserve’s Wednesday decision to lift rates by 25 basis points, bringing the target federal funds rate to a range of 3.75%–4.00%. Perhaps more critically, the central bank’s updated Summary of Economic Projections revealed that a strong majority of policymakers anticipate at least one additional rate increase before the end of the year.
Warsh Strikes Hawkish Tone at Press Conference
At the post-meeting press conference, Fed Chair Kevin Warsh adopted a notably hawkish stance. He stated that inflation remains “too high” and characterized the latest hike as having merely removed a “dose of accommodation”. The implication is clear: the current policy stance is still not restrictive enough, and further rate hikes remain in the pipeline.
Markets Price In Elevated Probability of October Move
Financial markets have quickly adjusted to the revised guidance. As of this writing, traders are pricing in just over a 50% probability of another 25 basis point hike at the Fed’s October meeting, according to data from the CME Group’s FedWatch tool.
Bitcoin Holds Steady Amid Macro Uncertainty
Despite the shifting rate outlook, Bitcoin has shown resilience, continuing to trade near the $76,260 level. The cryptocurrency is up a marginal 0.5% over the past 24 hours, suggesting digital asset markets are currently digesting the hawkish pivot without significant volatility.
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