U.S. August Core PCE Comes in Below Expectations; Goldman Sachs Pushes Second Rate Hike Forecast to December
nashnova research
August core PCE rose 0.25% month-on-month and 3.01% year-on-year, both below forecasts; Goldman Sachs responded by pushing its second rate-hike call from October to December — and now sees a strong chance the Fed may not hike again at all.
What did this inflation print actually say?
Core PCE — the Fed's preferred price gauge, stripping out food and energy — rose 0.25% month-on-month and 3.01% year-on-year, slightly below expectations.
Headline PCE held at 3.4% year-on-year; the monthly pace picked up to 0.3%, partly driven by higher gasoline spending.
This means → Inflation didn't worsen, but it didn't meaningfully improve either — the roughly 3% level has been stuck for months.
Why did Goldman change its call?
Goldman's economics team, led by chief economist Jan Hatzius, pushed its second rate-hike forecast from October to December.
Two reasons: the softer-than-expected core PCE, and New York Fed President John Williams's dovish-leaning remarks the day before.
Goldman added that the FOMC — the Fed's rate-setting committee — faces "a strong chance of ultimately concluding that no further hikes are needed."
In plain terms = Goldman thinks this hiking cycle may already be over; even the December hike might not happen.
How did markets react?
CME FedWatch showed October hike odds falling from about 45% to roughly 39% after the release; December hike odds rose to 90%.
The 2-year Treasury yield dipped briefly from 4.887% to 4.864%, then recovered the entire move; the 10-year yield continued climbing.
This means → The short end barely flinched — markets don't see this print as a game-changer. December remains the real battleground.
What are Wall Street analysts arguing about?
Nick Timiraos — often called "the new Fed whisperer" — noted that June-July inflation improvements did not carry into August, and that inflation has made no further progress toward the 2% target since April 2025.
Capital Economics chief North America economist Stephen Brown leaned dovish: after a statistical methodology revision, historical core inflation was revised down by about 0.3 percentage points, and the past three months' annualized core rate fell to 2%.
BMO senior economist Sal Guatieri was more hawkish: the share of PCE components running above 3% annualized fell from 54% to 51%, but that is "still far above normal" — hardly evidence that the underlying inflation trend has meaningfully improved.
Is the hiking cycle over?
BULL
Data is cooling
Core PCE undershot expectations; the revised three-month annualized rate is back at 2%.
Goldman's pivot
Goldman now sees a strong chance the FOMC concludes no further hikes are needed.
BEAR
Stuck at 3% too long
No further progress toward 2% since April; the improvement streak broke in August.
Hot components persist
PCE components above 3% still make up 51% of the basket — well above normal.
In plain terms = inflation hasn't gotten worse, but calling it 'significantly better' is a stretch — the Fed will most likely watch several more months of data before deciding.
What signal is the broader economy sending?
U.S. Q2 GDP growth was revised sharply higher to an annualized 2.2%, well above the earlier estimate of 1.5%.
Real final sales to private domestic purchasers — a gauge of underlying demand — was revised up to 4.6%.
August consumer spending rose 0.9% month-on-month; income growth edged down to 0.2% from the prior month's 0.3%.
This means → The economy is still running hot, which gives the Fed room to stay patient — if growth isn't breaking, there's no rush to pivot.
What comes next?
The upcoming nonfarm payrolls report and September CPI will be the next critical checkpoints.
This means → If the jobs data also cools, December hike odds will drop further; if not, markets may reprice toward a more hawkish path.
In plain terms = This PCE report half-closed the door on an October hike, but the story isn't finished — the real answer waits for jobs and next month's CPI.
市场有风险，内容仅供研究参考，不构成投资建议。