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Goldman sees 'close call' on Fed rate hike timing

The Federal Reserve building in Washington.
Gary Cameron | Reuters

Goldman Sachs economists say it is now a close call on whether the Federal Reserve raises rates for the first time in September, as the firm had forecast, or in December.

In a note Tuesday, the economists said their reasons are more about the lack of inflation than the weakness of the first-quarter data and the sluggish rate of job growth, with just 126,000 nonfarm payrolls in March.

"The wage weakness is one reason why we find it difficult to be 'reasonably confident' that inflation will return to 2 percent over the medium term. Other reasons are the low starting point for the core (consumer price index and personal consumption expenditures) measures, the inherent unpredictability of inflation, and the possibility of a further substantial appreciation in the U.S. dollar, " they wrote.

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