Goldman Sachs sees a 75bp hike at next week's FOMC. Despite the June CPI numbers allowing some Fed officials to keep a 100bp hike on the table, a pullback in inflation expectations "seems to have persuaded the Committee to stick to its original plan".
- "Another last-minute change to previous guidance might invite a substantial repricing and would make it harder for the FOMC to control market expectations and financial conditions in the future."
- Their key question for the meeting is what guidance Powell wil give about September's rate hike size. Strong guidance will probably be avoided, with Powell emphasizing "nimble and data-dependent" policy, though might gently remind that 75bp hikes are unusually large and that rates are now at the FOMC's long-run estimate.
- Goldman continues to expect another 50bp hike in Sept, and 25bp in each of Nov and Dec to 3.25-3.50%.