An 87% probability. That is where futures markets now put the odds of a Federal Reserve rate increase at this week's FOMC meeting, up sharply from roughly 70% just before last week's inflation data landed — and the shift has dragged two of Wall Street's most influential banks along with it.
Goldman Sachs dropped its call for the Fed to hold rates steady and now expects a quarter-point increase when the Federal Open Market Committee meets September 15-16. JPMorgan went further, forecasting back-to-back quarter-point hikes in both September and December. Both banks had spent much of the summer arguing the Fed was done tightening for this cycle.
JPMorgan's call carries a specific rationale behind it. Economists led by Michael Feroli pointed to a week that saw rising bond yields, higher energy prices, and inflation readings firm enough to make a hike "more likely than not" at the upcoming meeting — language notably more assertive than the bank's stance heading into the summer.
Highlights
- Markets now price an 87% chance of a September hike, up from roughly 70% before last week's data
- Goldman Sachs abandoned its "hold" call for a 25-basis-point increase
- JPMorgan now forecasts quarter-point hikes in both September and December
- Trigger: hotter-than-expected August CPI and PPI prints, plus oil above $100 a barrel
The reversal traces back to a string of inflation readings that came in hotter than economists expected. Data released last week showed both consumer and producer prices in the U.S. rose more than forecast in August, undercutting the disinflation narrative that had underpinned rate-cut hopes for much of the year. Reuters reported that Goldman's economists now see the FOMC as reluctant to defy a market that has already priced in a hike, arguing that holding steady could itself become the bigger surprise.
Oil prices have added to the pressure. Crude has climbed above $100 a barrel as renewed hostilities in the Middle East squeeze supply, feeding directly into the same energy-cost channel that pushed August's producer price index higher. Rising bond yields across the curve have compounded the picture, with traders increasingly betting the central bank has less room to look past inflation than it signaled earlier in the year.
Crypto and equity markets have been trading in lockstep with the shifting rate outlook for weeks, and this week's moves extend a run of similar recalibrations. A majority of major banks had already lined up behind a hike before Goldman's flip, and last week's CPI print had already pushed odds into the 90% range on some desks. What's notable about Goldman and JPMorgan's moves is less the direction — the market had largely gotten there already — than the fact that two of the most closely watched shops on the Street no longer see a case for waiting.
Related: 16 of 20 Major Banks Now Call for a Fed Rate Hike This Month
Goldman isn't abandoning its longer-term easing thesis entirely. The bank still projects two rate cuts in 2027, just later than it had penciled in before this month's data. That leaves the near-term path looking more hawkish even as the multi-year trajectory stays intact — a distinction traders in both equities and crypto will likely spend the next few sessions trying to price correctly.
The immediate test comes with the FOMC's decision itself, expected midweek, followed by remarks from the Fed chair that will shape how markets read the central bank's tolerance for further inflation surprises. With the 10-year Treasury yield already climbing toward 5% in anticipation, bond and crypto traders alike are bracing for a decision that, for the first time in months, carries genuine two-way risk.
A hike itself would be a notable break from the pattern markets have grown used to. The Fed spent much of the prior two years easing policy, and a return to tightening — even a single quarter-point move framed as a one-off response to sticky inflation — changes the calculus for every rate-sensitive asset class, crypto included. Digital assets have tended to trade as a liquidity-sensitive risk asset in this cycle, rallying on rate-cut expectations and wobbling whenever the tightening narrative resurfaces, which is part of why this week's Goldman and JPMorgan revisions are getting outsized attention from crypto desks rather than being treated as a purely equities-and-bonds story.
Not every forecaster has fallen in line. A handful of smaller shops still see the Fed holding steady this week, arguing that a single month of hot inflation prints shouldn't be enough to reverse a multi-year easing cycle on its own. But with Goldman and JPMorgan now aligned with the market-implied probability rather than fighting it, the burden of proof has shifted toward the holdouts to explain why the FOMC would defy odds that have already priced in a move.
