Goldman Sachs Reverses Call, Now Sees Fed Hiking Rates Again in October

Goldman Sachs has flipped its outlook on the Federal Reserve’s next move, now forecasting another rate hike in October after previously expecting the central bank to pause following September’s increase.

Why Goldman Changed Its View

The revised forecast follows the Fed’s decision Wednesday to raise its benchmark rate by 25 basis points, bringing the target range to 3.75%-4.00%. What caught Goldman’s attention wasn’t just the hike itself but the Fed’s updated projections, which showed most policymakers expect at least one more increase before the year is out. Fed Chair Kevin Warsh reinforced that hawkish stance during the post meeting press conference, saying inflation remains too high and describing the latest hike as simply removing a “dose of accommodation,” a signal that policy still isn’t restrictive enough and further hikes could follow.

Markets Still Split on October

Traders aren’t fully convinced yet. According to CME’s FedWatch tool, the odds of another 25 basis point hike in October currently sit just above 50%, suggesting the market sees it as a coin flip rather than a certainty. Bitcoin, meanwhile, showed little reaction to the shifting rate outlook, trading near $76,260 and up a modest 0.5% over the past 24 hours.