Goldman Sachs and JPMorgan turn hawkish together! With persistent inflation and $100 oil prices looming, is a Federal Reserve rate hike in September already a foregone conclusion?

According to Jinse Finance APP, Goldman Sachs and JPMorgan currently expect that the Federal Reserve will raise interest rates this week. A series of stronger-than-expected inflation data has challenged market hopes that "there is no need for further tightening of policy and price pressures will continue to ease."

Data released last week showed that both U.S. consumer prices and producer prices in August increased more than anticipated, and as hostilities escalated again in the Middle East, oil prices climbed above $100 per barrel. Subsequently, these two Wall Street banks joined the growing number of institutions turning more hawkish in their forecasts.

In a report released last Friday, Goldman Sachs abandoned its previous prediction of "holding rates steady" and now expects the Federal Reserve to raise rates by 25 basis points at the meeting on September 15–16. Meanwhile, JPMorgan predicts that the Federal Reserve will raise rates by 25 basis points each in September and December.

The latest data has reignited concerns: after months of slowing inflation, the Federal Reserve's progress toward its 2% inflation target may stall.

Goldman Sachs economist David Meric said, "We believe that the Federal Open Market Committee (FOMC) will be reluctant to surprise the market."

Following the release of the inflation report, JPMorgan also took a similarly hawkish tone.

JPMorgan economists led by Michael Feroli stated in a report: "This week, both bond yields and energy prices rose, and the inflation data was solid enough to make a rate hike at next week's FOMC meeting more likely than not."

This week, as policymakers conclude their meeting on Wednesday, the prospect of further tightening by the Federal Reserve will be a key focus; meanwhile, investors are also watching for policy signals from the Bank of Japan.

JPMorgan said that the latest inflation data casts doubt on the ongoing downward trend in inflation, so the bank predicts that the Federal Reserve will raise rates again this year and has raised its forecast for the long-term policy rate to 3.25%.

According to the CME FedWatch Tool, the market now sees an 87% probability that the Federal Reserve will raise rates by 25 basis points this month, up from about 70% prior to the latest inflation data, and expects another hike in December.

In a separate research report last Sunday, Goldman Sachs added that although the timing is later than previously forecast, it still expects the Federal Reserve to cut rates twice in 2027, as Goldman Sachs believes this week's expected rate hike is driven more by market pricing than by inflation fundamentals.