Goldman Sachs: 85% probability of Fed rate hike in September
In brief
- Goldman Sachs projects 85% probability of 25 basis point Fed rate hike in September
- Federal funds rate would shift from 3.50%-3.75% to 3.75%-4.00% if hike proceeds
- Market data shows declining pause probability across next three Fed meetings
- Analyst Albert Edwards calls potential rate hike 'criminally stupid'
The rate hike scenario
Goldman Sachs projected an 85% probability that the Federal Reserve will raise rates by 25 basis points in its upcoming session. The Federal Open Market Committee is scheduled to meet on September 15-16, 2026, to discuss the country's monetary policy direction.
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 stance. This shift carries implications for borrowing costs, asset valuations, and broader financial market positioning.
Market expectations shift
Market data shows a significant decline in the probability of a pause across the next three Fed meetings. Market participants are increasingly anticipating a rate hike in the upcoming session, aligned with the views expressed by Goldman Sachs.
Not all observers agree. Albert Edwards, a prominent market analyst, has voiced strong opposition to a potential rate hike, describing such a move as "criminally stupid." The divergence between institutional expectations and skeptical voices underscores the debate within financial markets over whether tightening remains justified given current economic conditions.
Interest-sensitive sectors—including equities, real estate, and leveraged strategies—typically react to Fed rate moves. The September decision will likely influence positioning across crypto and traditional finance markets alike.
