Following a surge in inflation and rising crude prices, major banks and economists have pivoted to forecast a 25 basis point Fed rate hike at this week's policy meeting.
Oil prices above $100 a barrel are intensifying inflation pressures and reinforcing the case for a Fed rate hike.
Bank of America senior economist Stephen Juneau provided commentary on the Fed's rate hike expectations, but the news itself is macro-driven and not directly impactful on the bank.
Goldman Sachs reversed its forecast and now expects a September rate hike, reflecting changing macro views.
JPMorgan also shifted its forecast to expect a rate hike this week, aligning with the new consensus.
HSBC joined other major banks in forecasting a Fed rate hike, highlighting global attention on the monetary policy shift.
Deutsche Bank moved its forecast to a hike, contributing to the global consensus on near-term tightening.
BMO Capital Markets chief economist Scott Anderson warned about Fed credibility, but no direct impact on BMO stock.
A Reuters poll reveals 85% of economists now expect the Federal Reserve to raise interest rates by 25 basis points this week, marking a sharp reversal from previous consensus. Driven by hotter-than-expected August CPI data and oil prices exceeding $100 per barrel, major financial institutions including Goldman Sachs and JPMorgan have updated their forecasts to align with the hawkish shift.
The shift was triggered by hotter-than-expected August inflation data, where the CPI rose 0.4% and core measures exceeded analyst expectations, alongside rising energy costs.