Goldman Throws In The Towel Again, Lists 3 Reasons Why Warsh Will Hike Again Next Month

Having only changed its long-running baseline outlook for no Fed hikes just hours before Wednesday's FOMC, when Goldman said it now expects another rate hike this week, but not because the economy needs it (despite last week's hot CPI) but simply not to disappoint traders, and also predicting no future rate hikes after, overnight Goldman's economists - who were clearly much more dovish than Warsh - capitulated again, writing they "now expect the FOMC to deliver a second 25bp hike in October, a change from our previous expectation that September would be the only hike", because while the Fed's hike was widely expected, the meeting "was more hawkish than we expected." 

Before we dig deeper, a quick reminder of what happened yesterday for those who may have missed it: the FOMC raised the funds rate by 25bp to 3.75-4% with Warsh attributing the decision to hike primarily to stronger labor market and activity data, “inflation summer trends [that] weren’t passing the test,” and the effect of geopolitics on commodity prices.