Goldman Sachs: Market Expectations for Fed Rate Hikes Are Overly Hawkish

TechFlow news, August 17, Goldman Sachs Group stated that given US inflation is cooling, market expectations for Fed rate hikes remain too aggressive. Goldman Sachs Chief Economist Jan Hatzius wrote in a report that due to weak retail sales data, disappointing employment data, and continuously slowing inflation data, the likelihood of the Fed raising rates at the September meeting is "extremely low". Hatzius wrote: "According to our baseline economic forecast, over time, the likelihood of further improvement in inflation data is higher than the likelihood of deterioration again. We still believe the market's pricing of the federal funds rate is too hawkish." Data shows the market has pushed back expectations for the next 25-basis-point Fed rate hike to January next year, whereas a week ago the market fully expected the Fed to raise rates in December. Goldman Sachs believes that although market pricing is no longer that hawkish, there is still room for further retreat in rate hike expectations. (Jin10)