Will another Fed hike follow? Goldman Sachs says the US Federal Reserve could raise interest rates again in October | Today’s news
The U.S. Federal Reserve raised its benchmark interest rate on Wednesday, the first such increase since 2023. The rate hike announced by Trump-appointed Fed Chairman Kevin Warsh was widely expected as a move to combat stubbornly high inflation, which has held above its 2% target for more than five years.
Warsh said the economy has shown signs of picking up since the central bank decided to leave rates unchanged in late July. Inflation also remained stubbornly above the Fed’s 2% target, and he noted no signs of cooling, according to The Associated Press.
Warsh also noted that other central banks are raising interest rates in response to global turmoil and higher gas prices.
US President Donald Trump has been a vocal critic of raising interest rates and regularly clashed with Warsh’s predecessor, Jerome Powell, over high rates during his tenure as Federal Reserve chairman.
Goldman Sachs sees another Fed rate hike
The Fed meets at the end of October next year, and most economists expect officials to leave rates unchanged after that, with the midterm elections just a week away. But Goldman Sachs said it expects the US Federal Reserve to raise interest rates by 25 basis points in October.
According to Reuters, Goldman Sachs said October was the most likely time for the next move because it was the most natural to deliver the hikes the Fed presented as supporting an “earlier return” to the 2% inflation target at consecutive meetings.
Trump reacts to Fed rate hike
Meanwhile, Trump has gone public with his criticism of the Fed’s rate hikes and endorsed Warsh.
“The board is very hostile. They’re very political. They’re doing the wrong thing. They’re a bunch of politicians,” Trump told reporters in North Carolina before a midterm campaign rally, adding, “They’re raising rates to make Trump do as bad as they can.”
In a post on Truth Social, Trump suggested that US interest rates should be 1% or less.
“Interest rates in the United States should be 1% or less because we are FAR the best credit in the world. Our country WILL be BUMMING with new investment! If we stopped trading with every country we have a deficit with, which is most of them, we would make at least $1.5 trillion a year. The word ‘deficit LO’ is nothing more than every country fan in the world, and this cannot go on, AND LOWER INTEREST RATES RAPIDLY RATES FOR THE UNITED STATES OF AMERICA,” Trump said.
