Global brokerages expect Fed rate hikes after strong inflation report
SPY•Brokerages see more Fed hikes after inflation data
Sept. 15 (Reuters) - Global brokerages expect the Federal Reserve to raise interest rates this year after stronger-than-expected inflation readings reinforced bets that policymakers will keep tightening monetary policy.
Data on Friday showed the U.S. Consumer Price Index increased 0.4% in August after edging up 0.1% in July. Core CPI increased 2.4% year-on-year in August after rising 2.5% in July.
Brokerages including Goldman Sachs, J.P. Morgan and Morgan Stanley are forecasting a quarter-point increase at the Fed's Sept. 15-16 meeting, with several addressing that policymakers may need to keep rates higher for longer to return inflation to the central bank's 2% target.
Traders now see an over 94% chance of a quarter-point Fed rate hike in September and are fully pricing in chances of another such increase by year-end, according to data compiled by LSEG.
2026 Fed forecasts from major brokerages
| Brokerage | Total cuts/hikes in 2026 | No. of cuts/hikes in 2026 | Fed funds rate |
|---|---|---|---|
| BofA Global Research | 75 bps of hikes | 3 (September, October and December) | 4.25%-4.50% |
| Goldman Sachs | 50 bps rate hike | 2 (September and December) | 4.00%-4.25% |
| J.P. Morgan | 50 bps rate hike | 2 (September and December) | 4.00%-4.25% |
| Nomura | 50 bps of hikes | 2 (September and December) | 4.00%-4.25% |
| HSBC | 50 bps of hikes | 2 (September and December) | 4.00%-4.25% |
| Barclays | 50 bps of hikes | 2 (September and December) | 4.00%-4.25% |
| Deutsche Bank | 50 bps of hikes | 2 (September and December) | 4.00%-4.25% |
