September Fed interest-rate increase is 'very unlikely,' Goldman Sachs says
1 hr ago
2 min read
Summary
- Goldman Sachs said a September Federal Reserve interest-rate increase is “very unlikely.”
- The bank’s chief economist, Jan Hatzius, said inflation is likely to keep improving, and current market expectations for the federal funds target rate remain too hawkish.
- Bitcoin is trading around $63,600, up about 1% today.
"Very unlikely."
That's how Goldman Sachs described the chances of a September Federal Reserve interest-rate increase, which provides a potential major tailwind for bitcoin BTC$63,299.11, which has traded in a narrow range since early July.
The cryptocurrency is currently priced around $63,500, a 1% gain since midnight UTC. The price has remained firmly locked within the $62,000–$66,000 range that has been in play for over a month.
Goldman lowered the odds in response to a string of soft economic data, specifically retail sales, a key barometer of consumption, and employment figures alongside slowing inflation, Chief Economist Jan Hatzius told clients, according to Bloomberg.
"Under our baseline economic forecasts, the inflation news is more likely to improve further than to deteriorate anew as the year progresses," Hatzius wrote in a note Sunday. "We still think market pricing for the funds rate is too hawkish."
Interest rates dictate the availability of credit and fiat liquidity in the broader economy, directly influencing demand for risk-on assets such as bitcoin. Rate increases are traditionally bearish, a dynamic clearly visible during the aggressive Fed tightening that triggered the 2022 slide. Conversely, rate cuts are viewed as bullish, echoing the crypto rally that followed the March 2020 Covid crash.
At the time of writing, traders are pricing in just a 30.6% chance that the Fed will raise its benchmark interest rate by 25 basis points to the 3.75%–4% range, with the majority expecting the status quo to continue, according to CME FedWatch data. The odds dropped after last week's July report showed inflation slowing, as expected.
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