Goldman Sachs Delays Fed Rate Hike Forecast to December
Goldman Sachs has delayed its forecast for the Federal Reserve’s second rate hike from October to December after August core PCE inflation rose 3.01% year on year, below expectations. The bank now expects fourth-quarter core PCE inflation at 3%, compared with the Fed’s median forecast of 3.4%, and said there is a strong possibility that officials will decide no further rate hike is needed.
New York Fed President John Williams supports a patient approach, although he still views one additional rate increase this year as a base-case possibility. Fed Governor Michael Barr remains more hawkish, warning that inflation has not shown a clear path back to the 2% target. Market pricing puts the probability of an October hike at roughly one-third, while traders still expect a possible December increase.
The Fed raised its policy rate by 25 basis points in September to 3.75%-4%. September employment data, due on October 2, will be a key catalyst for interest-rate and crypto-market volatility. Strong job creation or renewed inflation could revive expectations for another Fed rate hike, while weaker data may support risk assets such as Bitcoin.
U.S. spot Bitcoin ETFs recorded $2.39 billion in net inflows from September 21-25, including about $1.16 billion for BlackRock’s IBIT. However, Bitcoin still fell below $84,000 on September 28, showing that ETF demand has not eliminated sensitivity to monetary policy, energy prices and geopolitical risk.
Neutral
The immediate market impact is neutral because the news contains both dovish and hawkish signals. Goldman Sachs delaying its Fed rate hike forecast to December, weaker-than-expected core PCE inflation and Williams’ call for patience could reduce near-term pressure on Bitcoin and other risk assets. Lower rate expectations generally support liquidity-sensitive markets and may weaken the US dollar.
However, Barr continues to argue that further tightening may be required, and the Fed’s September projections showed that most officials still expected at least one additional hike before year-end. The September employment report is therefore critical. Strong payroll growth, stable wages or renewed inflation could push Treasury yields higher and trigger risk-off trading. Weak employment data could have the opposite effect, although an unexpectedly sharp slowdown could also raise recession concerns.
Bitcoin ETF inflows provide a supportive structural signal, but the price decline below $84,000 despite $2.39 billion in weekly inflows shows that macroeconomic factors remain dominant. Similar periods before major Fed decisions have often produced elevated volatility, with traders rotating between spot exposure, derivatives and cash as policy expectations change. In the short term, BTC is likely to react most strongly to the jobs report, inflation revisions, Treasury yields and the US dollar. In the longer term, sustained ETF inflows and eventual easing would be bullish, while persistent inflation and additional rate hikes would remain bearish risks.