Goldman Sees September Fed Hike as Unlikely as Inflation Slows

Goldman Sachs argues a September 25-basis-point Fed rate hike is unlikely as inflation cools and recent data undershoot—making the hawkish path priced into markets too aggressive. Hatzius notes inflation is more likely to improve through the year, with July data easing fears of deterioration. CME data had put odds of a hike around 30% ahead of the meeting (Sept. 15-16). The bank also expects the yield curve to steepen on cooling price pressures and waning rate-hike expectations, even as it posts strong Q2 results (EPS $20.98, revenue $20.34B) fueled by equities and investment banking.