Goldman Sachs sees 85% chance of Fed rate hike in September meeting

Albert Edwards, a prominent market analyst, has voiced strong opposition to a potential interest rate hike by the U.S. Federal Reserve, describing such a move as “criminally stupid.” Despite Edwards’ criticism, Goldman Sachs has projected an 85% probability that the Federal Reserve will raise rates by 25 basis points in its upcoming meeting. This expectation comes amid a broader market consensus leaning towards a rate increase, reflecting a shift in sentiment from earlier predictions of a pause.

The Federal Open Market Committee (FOMC) is set to meet on September 15-16, 2026, to discuss the country’s monetary policy. The current effective federal funds rate stands at 3.63%, within the Fed’s target range of 3.50%–3.75%. Should the Fed proceed with the expected rate hike, it would adjust the target range to 3.75%–4.00%, indicating a tighter monetary policy. This development is crucial for assets sensitive to interest rate changes.

Market data shows a significant decline in the probability of a pause across the next three Fed meetings, with the likelihood of a different decision sequence increasing substantially. This shift suggests that market participants are increasingly anticipating a rate hike in the upcoming session, aligned with the views expressed by Goldman Sachs.

Key Takeaways

• Market behavior suggests a strong anticipation of a 25 basis point rate hike by the Federal Reserve.
• The probability of a pause in upcoming Fed meetings has significantly decreased as expectations of a rate hike solidify.
• Goldman Sachs’ projection of an 85% chance for a rate increase reflects a broader market consensus towards a tighter monetary policy.

What to Watch

The Federal Open Market Committee’s decision on September 15-16 will be pivotal in determining the immediate direction of U.S. monetary policy. Observers will closely monitor statements from key figures such as Federal Reserve Chairman Kevin Warsh and Governor Michelle Bowman for any indications of future rate decisions. A confirmation of the rate hike could further influence market pricing and expectations for subsequent Fed meetings. Additionally, any deviation from the expected rate decision could lead to significant market adjustments.

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Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.