Goldman Sachs Sees No September Fed Rate Hike, Giving Bitcoin A Bullish Tailwind

Goldman Sachs has dashed bets on a US Federal Reserve rate hike in September, citing weaker retail sales and disappointing employment data. The prediction eases one of the biggest near-term monetary policy headwinds for Bitcoin and other risk assets, teeing up a strong end-of-year rally.

Softer data weakens case for a Federal Reserve rate hike

Goldman Sachs chief economist Jan Hatzius revealed in a client note that a Fed rate hike in September is “unlikely” following a raft of emerging economic data. July retail sales fell 0.6% month-over-month, while weaker employment figures and moderating inflation have also reduced pressure for another rate increase.

The Wall Street giant forecasts that the Fed will keep rates steady at 3.50%-3.75% for the rest of 2026. According to Goldman Sachs’ analysts, the earliest rate cuts will come in 2027, while lowering the odds of any interest rate hike.

Meanwhile, Hatzius cited estimates that around five members of the FOMC from the last meeting favored a rate hike. Recent macroeconomic data has not shown any likelihood of increasing the number of FOMC members keen on pursuing a rate hike.

“Under our baseline economic forecasts, the inflation news is more likely to improve further than to deteriorate anew as the year progresses,” said Hatzius. “We still think market pricing for the funds rate is too hawkish.”

Goldman Sachs’ stance is notable because the investment bank had previously maintained a hawkish outlook. Back in June, the bank’s research unit released a note predicting the earliest rate cuts to occur in June and December 2027, but new data has seen the bank change its estimates.

Data from the Fed CME FedWatch Tool pegs the odds for a 25 bps Fed rate hike in September at 30%. Conversely, the data also points to a probability of nearly 70% for the Fed holding rates steady.

Source: CME FedWatch Tool

Bitcoin bulls rub their hands in glee

The Goldman Sachs call is bullish for Bitcoin because it reduces the risk of further monetary tightening at a time when crypto remains highly sensitive to liquidity and risk appetite.

Bitcoin bulls are bracing for an incoming rally after Goldman Sachs’ Fed rate predictions. Already, markets have started responding to the shift, with the dollar falling to a 10-week low as investors reduced expectations for further Fed tightening.

Gold price topped $4,400 as Goldman Sachs pushed back on a Fed rate hike. Previously, the bank slashed its end-of-year gold prediction by $500, citing a hawkish Fed stance, sparking speculation of an incoming review.

Meanwhile, US Stock futures inched higher with investors jostling for positions. While these are tell-tale signs of an incoming rally, the Fed still has another month of inflation and employment data to consider before its September meeting.