Fed Seen Delivering Rate Hike to Avoid Disappointing Markets, Goldman Says

01:22 PM EDT, 09/15/2026 (MT Newswires) -- The Federal Reserve will likely raise its policy rate on Wednesday to avoid disappointing markets that almost fully price in a hike, Goldman Sachs said. As the Federal Open Market Committee kicked off its two-day policy meeting on Tuesday, Goldman insisted that it doesn't see a strong economic case for a tighter policy at this point. Official data released last week showed consumer inflation and producer prices hit three-month highs in August as energy costs rose. "We added a 25 (basis-point) rate hike to our forecast after the August CPI, which had little impact on our inflation view but pushed market pricing of a hike to 90%, high enough that the FOMC will likely want to avoid the market reaction from staying on hold," Goldman said in a note sent Monday night. Markets are currently pricing in a 93% probability that the FOMC will lift its benchmark lending rate by 25 basis points on Wednesday, according to the CME FedWatch tool. In a note e-mailed Monday, UBS Securities projected a quarter-percentage-point rate increase this week, while predicting the Fed's latest "dot plot" to signal another hike later in 2026. Goldman, however, said that the FOMC may avoid signaling further hikes in both the policy statement and the Summary of Economic Projections document that includes anonymous expectations on interest rates, dubbed the dot plot. Goldman expects the dot plot to show a slim FOMC majority of 10 members leaning toward a single hike this year. However, there's a risk that a majority could back two increases "if more participants than we expect see a hike this week as a normal response to higher oil prices," according to the Wall Street giant. Brent crude prices have jumped 19% so far this month after notching gains in both August and July, amid an intensifying conflict in the Middle East that have fueled fears of prolonged supply disruptions. Goldman said the impact of one-time factors that keep inflation well above the 2% target is fading, citing an improvement in core personal consumption expenditure inflation to a 2.5% pace over the last three months. "Inflation expectations are not at immediate risk of unanchoring (and) ... the economy is not overheated," the brokerage said. Fed Chair Kevin Warsh is unlikely to provide a clear path forward for policy when he speaks at the post-meeting press conference, according to Goldman. "Warsh could say that before deciding on further steps, the FOMC will 'carefully assess' incoming data or will want to see upcoming inflation reports or how the underlying inflation trend evolves, which all hint at waiting a bit longer to collect more information," the brokerage said.