Goldman Sachs Lowers Probability of September Rate Hike

Goldman Sachs has assessed that the likelihood of a rate hike by the U.S. Federal Reserve in September is low. The analysis indicates that the market's expectations for tightening are stronger than the flow of economic indicators, amid ongoing inflation slowdown and weakening employment data. Jan Hatzius, the chief economist at Goldman Sachs, stated that the chances of a rate hike during the September meeting are very low due to disappointing retail sales data, disappointing employment indicators, and a slowdown in inflation data. Hatzius mentioned that there is a higher likelihood of improvement in inflation data over time and assessed that the market's pricing of the federal funds rate is overly hawkish. The market has adjusted the timing for the next 25 basis point rate hike to January of next year, reflecting a shift from fully pricing in the possibility of a December hike just a week ago. The Fed's rate decisions are sensitive to inflation and employment indicators, and if the inflation rate exceeds the target level, the case for rate hikes could regain strength. This assessment is related to the lowered expectations for a September rate hike following the slowdown in July's CPI. Changes in rate expectations also impact cryptocurrency investors in South Korea, as Bitcoin and gold are non-yielding assets that could face pressure when rate hike expectations rise. However, the price direction of BTC is influenced by various factors beyond interest rates and dollar movements.

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