# Goldman Sachs Says September Fed Rate Hike Very Unlikely

**Published:** 2026-08-18T18:06:02.821Z  
**Topic:** Fed Rates  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/d57b5897-74a3-41a7-9bb4-ec77b4799994

Goldman Sachs chief economist Jan Hatzius signals a September Fed rate hike is unlikely as inflation eases, shifting market expectations for the next move.

A September interest rate increase by the Federal Reserve is "very unlikely" following two months of softer-than-expected jobs and inflation data, according to Goldman Sachs chief economist Jan Hatzius [1]. The assessment suggests that market pricing for the federal funds rate remains too hawkish, as traders adjust their outlook for the central bank’s September 15-16 meeting [2].

| At a glance | |
|---|---|
| September Hike Odds | ~30% |
| Next Expected Hike | January (previously December) |
| 2-Year Treasury Yield | >4% |
| Core PCE Inflation | 0.20% (July estimate) |

## Data trends and market positioning
The shift in outlook follows a string of underwhelming economic releases, including sluggish retail sales, declining nonfarm payrolls, and decelerating price pressures [1]. Goldman Sachs noted that the unemployment rate’s decline to 4.1% in July was driven by lower labor force participation rather than employment gains, while underlying job growth slowed to 5,000—well below the estimated 50,000 breakeven level [3]. 

Market participants have already begun to recalibrate. CME FedWatch data indicates that the probability of a 25 basis point hike to the 3.75%-4% range has fallen to approximately 30% [1]. Consequently, traders have pushed their expectations for the next rate increase from December to January [2]. Despite this shift, two-year Treasury yields remain above 4%, a level Goldman Sachs suggests indicates that the market has not yet fully priced in the bank's more dovish outlook [1].

## The outlook for the yield curve
Goldman Sachs anticipates that the US Treasury yield curve will steepen, driven by cooling inflation, fading rate-hike expectations, and persistent concerns regarding the US fiscal outlook [2]. While lower inflation typically supports a bond rally, the bank noted that heavy government borrowing continues to pressure investors to demand higher compensation for holding longer-maturity debt [2].

The bank remains confident that inflation will continue to improve rather than deteriorate as the year progresses [3]. While core personal consumption expenditures (PCE) inflation is on track for a 0.20% increase in July, Goldman Sachs expects downward revisions for certain categories, such as portfolio management services, at the end of September [3].

## What to watch
*   **FOMC Meeting:** The Federal Open Market Committee is scheduled to meet on September 15-16, where the committee's decision will clarify whether the current dovish consensus holds [1].
*   **Inflation Revisions:** Market participants should monitor end-of-September data revisions, particularly regarding portfolio management services, which may impact core PCE inflation readings [3].
*   **Treasury Yields:** Watch for movement in two-year Treasury yields; a sustained break below the 4% threshold would signal that the market is aligning more closely with the view that further hikes are off the table [1].

Whether the Federal Reserve’s dovish wing maintains its stance depends on whether the recent cooling in economic data persists or reverses. With market pricing still reflecting a degree of hawkishness, the primary question remains how quickly investors will fully unwind their expectations for further tightening.

## Sources
1. Investinglive — [Goldman calls September Fed hike very unlikely as inflation eases](https://investinglive.com/central-banks/goldman-calls-september-fed-hike-very-unlikely-as-inflation-eases/)
2. Moneycontrol — [Goldman says markets too hawkish on betting Fed will hike rates](https://www.moneycontrol.com/news/business/markets/goldman-says-markets-too-hawkish-on-betting-fed-will-hike-rates-14008083.html)
3. Au — [Goldman Sachs says Fed rate hike unlikely in September By...](https://au.investing.com/news/stock-market-news/goldman-sachs-says-fed-rate-hike-unlikely-in-september-93CH-4603528)
4. Bitcoinnews — [Goldman Sachs Says September Rate Hike Unlikely | A Boone for...](https://bitcoinnews.com/p/goldman-sachs-sept-rate-hike-unlikely-bitcoin)

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Cite as: TrendWatcher, "Goldman Sachs Says September Fed Rate Hike Very Unlikely", https://www.trendwatcher.in/article/d57b5897-74a3-41a7-9bb4-ec77b4799994