Goldman Capitulates: All Major Banks Now Forecast Fed Rate Hike as Economist Warns It's Wall Street, Not Inflation

The Quick Take

• Goldman Sachs reversed its rate hike forecast, becoming the last major bank to project a Fed increase next week.
• An economist argues the Federal Reserve rate hike primarily serves Wall Street interests rather than directly tackling inflation.
• The consensus shift signals near-certainty of a rate hike with broad crypto and financial sector impact expected.

The capitulation by Goldman Sachs marks a watershed in the rate outlook narrative. All major banks now project a Federal Reserve rate hike in the coming week, ending months of divergence among Wall Street's largest institutions. The shift reflects the Fed's consistent messaging that policy tightening remains necessary, even as inflation signals have grown more mixed. Crypto markets, historically sensitive to Fed tightening cycles, face renewed pressure as higher rates lift the opportunity cost of holding non-yielding digital assets like Bitcoin and Ethereum.

The economist's critique — that this hike benefits bank net interest margins rather than fighting consumer inflation — cuts to a structural debate in monetary policy. Commercial banks with large deposit bases see wider spreads as rates rise. Peer impact extends to crypto lenders and DeFi protocols, which compete with traditional yields. Capital flows could reverse from high-risk assets as risk-free rates rise, pressuring tokens across DeFi, stablecoins, and crypto ETFs. Bond markets should see short-term yields spike while equity tech multiples compress further.

The key catalyst to watch is the FOMC meeting itself — a hike confirming consensus expectations may be a buy-the-news event, while a surprise hold would trigger sharp crypto relief rallies. The macro variable determining whether tightening continues is the Consumer Price Index: if CPI re-accelerates post-hike, the Fed may signal more increases in its dot plot. Watch Federal Reserve Chair commentary for any shift in language around the sufficiently restrictive threshold that would mark the end of this rate cycle.

Synthesized from 1 source.