Goldman Sachs: September FOMC Minutes Reinforce Hawkish Bias, but December Hike Still Data-Dependent
The September minutes showed unanimous support for the 25bp hike to 3.75%-4.00%, with officials judging that progress on inflation had not been sufficient. Almost all participants saw inflation risks tilted to the upside, while labour-market risks had diminished and were now broadly balanced. Many viewed the hike as prudent risk management against inflation staying persistently above target, while others saw it as necessary under their baseline outlook. Most participants thought another increase would likely be appropriate by year-end, although they stressed an open-minded, data-dependent approach. Several still viewed policy as only mildly restrictive or not restrictive before the hike, and officials cited geopolitical developments and surging AI-related investment as potential inflation pressures. The base case remains for a second hike in December, though there is still a meaningful chance the Fed ultimately decides further tightening is unnecessary.
00%, with officials judging that progress on inflation had not been sufficient. Almost all participants saw inflation risks tilted to the upside, while labour-market risks had diminished and were now broadly balanced. Many viewed the hike as prudent risk management against inflation staying persistently above target, while others saw it as necessary under their baseline outlook. Most participants thought another increase would likely be appropriate by year-end, although they stressed an open-minded, data-dependent approach.
Several still viewed policy as only mildly restrictive or not restrictive before the hike, and officials cited geopolitical developments and surging AI-related investment as potential inflation pressures. The base case remains for a second hike in December, though there is still a meaningful chance the Fed ultimately decides further tightening is unnecessary.