Goldman Sachs has pushed back its forecast for the next Federal Reserve rate hike from October to December following a softer-than-expected August inflation reading, while warning that the tightening cycle may already be over. The core PCE price index rose 0.25% in August, slightly below expectations, and the annual rate fell to 3.01%, well below forecasts, partly due to methodological revisions to the portfolio management component. Goldman Chief Economist Jan Hatzius said Wednesday that the latest inflation data, combined with comments from New York Fed President John Williams, had changed the firm's view, and that an October hike now looks unlikely. Goldman now expects core PCE to grow 3.0% on a fourth-quarter-over-fourth-quarter basis, below the Fed's median forecast of 3.4%. CME FedWatch data showed markets pricing roughly a 35% probability of a December rate hike, and the next major test for Goldman's outlook will be Friday's jobs report, followed by the September CPI report and the October FOMC meeting.
Goldman Sachs Group IncGoldman pushes back its Fed rate hike forecast to December after cooler August core PCE, revising its own outlook on the tightening cycle.
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