Goldman Sachs: Market's Expectation for Fed Rate Hike Is Overly Hawkish

BlockBeats News, August 17th - Goldman Sachs Group stated that given the easing inflation in the United States, the market's expectation of a Fed rate hike remains overly aggressive. Goldman Sachs Chief Economist Jan Hatzius wrote in a report that due to soft retail sales data, disappointing job numbers, and ongoing inflation slowdown, the likelihood of a Fed rate hike at the September meeting is "extremely low."

Hatzius wrote, "Based on our core economic forecast, the probability of further improvement in inflation data over time is higher than the chance of further deterioration. We still believe that the market is pricing in the federal funds rate too hawkishly." Data shows that the market has now pushed back the expectation of the next 25 basis point Fed rate hike to January next year, while just a week ago the market was fully expecting a rate hike in December.

Goldman Sachs believes that although market pricing is no longer as hawkish, there is still room for further fading of rate hike expectations.