Goldman Sachs flips forecast, now sees September Fed rate hike

Sept. 13 (Reuters) - Goldman Sachs expects the U.S. Federal Reserve to raise interest rates by 25 basis points at its September meeting, joining a growing number of Wall Street firms that see further policy tightening as inflation concerns persist.

In a note on Friday, the brokerage reversed its previous call for the Fed to keep rates unchanged, citing markets pricing that points to a high probability of a rate hike and policymakers' likely reluctance to surprise investors with a pause.

Goldman Sachs said the shift was driven primarily by market pricing rather than a significant change in its economic outlook, adding that the recent surge in oil prices could make some policymakers more inclined to support additional tightening.

The revised forecast comes as stronger-than-expected U.S. producer price data and a surge in oil prices above $100 a barrel have rekindled inflation concerns, prompting investors and some brokerages to raise bets that the Fed may need to tighten policy further.

Markets are pricing in an 87% chance of a quarter-point Fed rate hike this month, up from roughly 70% prior to the latest data releases, and also expect another increase in December, according to CME's FedWatch Tool.