Goldman's Rosner: Probability of a Fed Rate Hike in July Is a Coin Flip
Taylor Wilson
Goldman Sachs Asset Management's Lindsay Rosner puts the odds of a July Fed rate hike at 50-50, hinging on the next PCE print; the market's prior dovish playbook is now dead, and investors must reprice the entire rate path.
Why is this being called a Fed "U-turn"?
Rosner labels the latest FOMC meeting — chaired by Kevin Warsh — a major "policy pivot."
The market's question going in was "How dovish will he be?" The answer: not dovish at all.
This means → policymakers barely discussed the labor market and focused almost entirely on pushing inflation back to 2% — an unmistakably hawkish signal.
What does "50-50" actually tell us?
Rosner assigns a 50% probability to a July hike; the swing factor is the upcoming PCE inflation report.
She adds that the Fed is abandoning traditional forward guidance — telling markets the next move in advance — and shifting to decide meeting by meeting, data print by data print.
In plain terms = the Fed used to hand out a syllabus; now it gives pop quizzes — each data release determines the next call.
Which data points could force a hike?
AI-related software and accessories sit inside the PCE basket and are expected to push the next reading higher.
Rising equity prices create a wealth effect that can feed through into higher inflation readings.
This means → both channels point the same way: inflation data carry upside risk, and the case for hiking is building.
How much has Goldman's baseline shifted?
Goldman now pushes its first rate cut to late 2027 and expects the Fed to hold steady for the rest of this year.
The firm is waiting on working-group results from the Fed's monetary-policy framework review.
This reflects a wholesale expectation reset — from "When do cuts start?" to "Will there be a hike?" — a directional shift, not a tweak in magnitude.
Content is for reference only, not financial advice.