Goldman Sachs Postpones Fed Rate Hike Expectation to December Following US Inflation
Following US inflation data coming in below expectations, the financial institution revised its forecast for the Fed's interest rate policy and moved it to December.
Following the August inflation in the US remaining below expectations, Goldman Sachs updated its forecast for the US Federal Reserve's (Fed) next interest rate hike, postponing it from October to December.
Rate Hike Forecast Postponed
In a published evaluation note, Goldman Sachs announced that it postponed the 25 basis point rate hike, which it previously expected to take place in October, to December.
The institution also stated that there is a high probability that the Federal Open Market Committee (FOMC) will decide that additional rate hikes are unnecessary.
Inflation Data Came in Below Expectations
The Personal Consumption Expenditures (PCE) price index in the US recorded a 3.4 percent increase on an annual basis in August.
Economists participating in the Reuters poll had expected this data to show an increase of 3.7 percent, and the results came in below expectations.
Market Pricing and Focus on Employment Data
According to CME Group's FedWatch tool, the probability of a 25 basis point rate hike at the October meeting dropped to 38 percent.
Investors and analysts in the markets are now focused on the US September non-farm payrolls data to be released on Friday.