Goldman Sachs raises expectations for Fed rate hike, expecting a second rate hike in October

Goldman Sachs analysts expect the Federal Reserve to raise interest rates by 25 basis points for the second time in October. Federal Reserve Chairman Kevin Walsh described the rate hike three times during the meeting as removing a dose of easing, with a 16-2 vote pattern showing that most members expect at least one more rate hike this year. The median federal funds rate is predicted to remain high until 2029, and the median neutral rate point will rise from 3.06% to 3.25%. AI interpretation: This prediction directly challenges the market consensus on the Fed's policy shift and clearly sends a strong signal of an extended tightening cycle. Goldman Sachs' revision of the interest rate hike path completely shattered the expectation of interest rate cuts, forcing the market to reprice the duration of the high interest rate environment. The upward adjustment of neutral interest rate expectations marks a more severe assessment by the Federal Reserve of long-term inflationary pressures, which will directly push up US bond yields and suppress the performance of risk assets. This decision logic established the Federal Reserve's firm stance of maintaining high interest rates to combat stubborn inflation, completely ending the illusion of loose monetary policy in the short term.