Goldman Sachs Turns More Hawkish, Projects Fed Rate Increase in October

Goldman Sachs has changed its forecast for Federal Reserve policy and now expects another 25-basis-point interest rate increase in October, citing the Fed’s latest projections as support for a continued hawkish stance.

The bank had previously forecast a September rate hike followed by a pause. It now expects policymakers to deliver another increase at the October meeting.

The revised outlook follows the Fed’s decision Wednesday to raise rates by 25 basis points, pushing the target range to 3.75%–4.00%. Updated projections from Fed officials showed that a strong majority still anticipate at least one additional rate hike this year.

Fed Chair Kevin Warsh reinforced that view during the post-meeting press conference, saying inflation remains “too high.” He described the latest increase as removing a “dose of accommodation,” indicating that policymakers may believe monetary policy has not yet become sufficiently restrictive.

According to the CME FedWatch tool, traders were pricing in slightly more than a 50% chance of another 25-basis-point hike in October.

Bitcoin was trading around $76,260, up approximately 0.5% over the previous 24 hours.