Goldman Sachs Sees September Fed Rate Hike as ‘Very Unlikely,’ Boosting Bitcoin Outlook

Goldman Sachs has significantly lowered its expectations for a Federal Reserve interest-rate increase next month, calling the odds “very unlikely” in a move that could provide relief for bitcoin, which has been trading in a tight range for weeks.

Soft Economic Data Shifts Fed Expectations

Goldman’s revised outlook comes after a string of weaker-than-expected economic indicators, including retail sales, employment figures, and slowing inflation. Chief Economist Jan Hatzius told clients that under the firm’s baseline forecasts, inflation is more likely to keep improving than to worsen as the year continues. Hatzius added that current market pricing for the federal funds rate remains too hawkish given the data.

Bitcoin Holds Steady Near $63,500

Bitcoin was trading around $63,500 at the time of reporting, up about 1% since midnight UTC. The price has stayed locked within a $62,000 to $66,000 range for more than a month. Interest rates play a direct role in shaping demand for risk assets like bitcoin, since they determine how much credit and liquidity flow through the broader economy. Rate hikes have historically weighed on crypto prices, as seen during the aggressive Fed tightening cycle that contributed to the 2022 downturn, while rate cuts have tended to support rallies, similar to what followed the market recovery after the 2020 pandemic crash.

Market Pricing Reflects Lower Hike Odds

According to CME FedWatch data, traders are currently pricing in just a 30.6% probability that the Fed will raise its benchmark rate by 25 basis points to a range of 3.75% to 4%. Most market participants now expect rates to hold steady. Those odds fell further after last week’s inflation report showed prices cooling in line with expectations.