Goldman Sachs: September Fed rate hike very unlikely as inflation slows

Goldman Sachs: September Fed rate hike very unlikely as inflation slows

Mon, August 17, 2026 at 3:22 PM GMT+3 2 min read

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Goldman Sachs called a September Federal Reserve interest-rate increase "very unlikely," arguing that market expectations for future rate increases remain too aggressive as inflation continues to ease, according to Bloomberg.

Chief economist Jan Hatzius made the call in a note published Sunday, citing a stretch of underwhelming economic readings — among them sluggish retail sales, lackluster jobs numbers, and decelerating price pressures — as grounds for skepticism that the Federal Open Market Committee would act at its Sept. 15-16 meeting. "After two months of materially softer jobs and inflation data, it's hard to see any of the doves shifting toward hikes," Hatzius wrote, according to Bloomberg.

Hatzius wrote that Goldman's baseline forecasts point to further improvement in inflation rather than a renewed deterioration. "Under our baseline economic forecasts, the inflation news is more likely to improve further than to deteriorate anew as the year progresses," he wrote. "We still think market pricing for the funds rate is too hawkish."

CME FedWatch data, as cited by CoinDesk, put the odds of a 25-basis-point increase to the 3.75%–4% target range at around 30% heading into the September meeting. Expectations shifted last week after July inflation data came in lower than anticipated. Market participants have shifted their view on when the next 25-basis-point increase will arrive, now pointing to January — a notable pullback from the prior week, when a December move had been fully baked into prices.

Goldman also flagged that the U.S. Treasury yield curve is positioned to steepen, a move the bank attributed to cooling price pressures, diminishing rate-hike expectations, and mounting concerns over the fiscal outlook. Two-year Treasury yields, which are among the most sensitive to shifts in Fed policy, remain above 4%.

Goldman's rate call comes as the bank has been navigating a strong business environment. The firm posted second-quarter earnings of $20.98 per diluted share, roughly double the year-ago figure, driven by record equities trading revenue and a surge in investment banking fees. Total net revenue reached $20.34 billion for the three months ended June 30, up 39% from a year earlier.