Goldman Sachs has abandoned its forecast for a Federal Reserve hold this month, telling clients the central bank will raise rates instead. The reversal reflects a sharp shift in market pricing that now assigns a high probability to a hike, and the bank’s view that policymakers will not risk wrong-footing investors with an unexpected pause.
Oil crosses the hundred-dollar mark
Brent crude has pushed above $100 a barrel, a level that Goldman says strengthens the case for additional tightening. Higher energy costs feed directly into headline inflation and raise the risk that price pressures broaden beyond the goods sector where they have been most persistent.
Producer prices add to the pressure
The call change follows a producer price index print that came in stronger than economists expected. The data reinforced the narrative that inflation’s deceleration has stalled, prompting a wave of Wall Street firms to revise their rate-path projections higher.
Markets price the new reality
Futures tied to the policy rate have moved aggressively in recent sessions, stripping out the odds of a hold that dominated positioning just weeks ago. The speed of the repricing suggests traders are more concerned about the Fed falling behind the curve than about overtightening.