Goldman Sachs has altered its forecast for the Federal Reserve’s next policy decision, now anticipating a 25-basis-point increase in the federal funds rate at the conclusion of the September 15-16 meeting. The investment bank previously projected that policymakers would leave rates unchanged.

The revision stems primarily from evolving market expectations rather than a major reassessment of underlying economic conditions. Interest-rate futures assigned an 87 percent probability to a September hike following the latest consumer price data, up from levels near 70 to 72 percent beforehand.

Details of the Forecast Change

Goldman Sachs economists indicated that the August Consumer Price Index report prompted only a modest adjustment to their core personal consumption expenditures inflation estimate, lifting the monthly figure to 0.26 percent. The firm stated that the data did not alter its fundamental view on inflation.

Instead, the bank cited the high market probability of a rate move and the Federal Open Market Committee’s likely desire to avoid an unexpected hold. Economist David Mericle noted that the committee would be reluctant to surprise markets given the prevailing pricing.

A quarter-point increase would raise the federal funds target range from its current 3.50 percent to 3.75 percent band to 3.75 percent to 4.00 percent. The decision is scheduled for release at 2 p.m. Eastern Time on September 16, followed by a press conference at 2:30 p.m.

August Inflation Readings

The Bureau of Labor Statistics reported that the Consumer Price Index rose 0.4 percent in August on a seasonally adjusted basis. The annual headline rate held steady at 3.4 percent.

Core CPI, which excludes food and energy, advanced 0.3 percent for the month. Its year-over-year pace eased to 2.4 percent, the lowest reading in five years. Energy prices climbed 16.3 percent over the prior 12 months, while food costs increased 2.7 percent.

Categories showing monthly gains included communication services, lodging, airline fares, education and used vehicles. Declines appeared in medical care and motor vehicle insurance.

Market and Analyst Perspectives

Other major institutions have also adjusted expectations amid persistent inflation concerns. J.P. Morgan anticipates quarter-point increases in both September and December.

Some market strategists questioned whether the economic data alone warranted the shift in forecasts. James Thorne, chief market strategist at Wellington-Altus, argued that the change appeared linked more closely to market pricing than to a revised inflation outlook.

In contrast, KPMG chief economist Diane Swonk described service-sector price pressures as remaining elevated and projected three rate increases by early 2027. She estimated that services excluding housing rose 0.5 percent in August and 3 percent over the year.

The Federal Reserve targets 2 percent inflation using the personal consumption expenditures price index. Analysts continue to differ on the implications of the latest CPI figures for that preferred measure.

Implications for Risk Assets

Higher interest rates typically tighten financial conditions and can reduce appetite for riskier assets. Cryptocurrency markets, including Bitcoin, have historically shown sensitivity to shifts in U.S. monetary policy and liquidity conditions.

Bitcoin traded near $77,000 in mid-September, remaining below the $80,000 level as participants prepared for the policy announcement. Price movements around the inflation release showed limited lasting gains despite temporary rebounds.

The Federal Open Market Committee will also release updated economic projections and individual rate-path expectations alongside the September decision. Chair Kevin Warsh is expected to address questions on energy costs, service prices, labor-market developments and the potential path of policy beyond the immediate meeting.