Market Insider

Goldman just did a quick about-face on its Fed rate hike call

Janet Yellen
Xinhua | Bao Dandan | Getty Images

Goldman Sachs economists stepped back from their bold call for a Fed rate hike this month after a surprisingly weak report on the service sector and a lack of clear signals from Fed officials.

The economists lowered the odds Wednesday morning for a September rate hike to 40 percent. On Friday, they gave 55 percent odds even after the tepid August jobs report convinced many that the Fed was not likely to move soon.

Goldman Sachs economists had said they believed Fed officials were intentionally sending a strong signal about raising interest rates in September during their recent meeting at Jackson Hole, Wyoming.

Goldman's call for a September hike did go against the herd, as most economists believed then, as they do now, that the weakish jobs report for August ruled out a rise in rates.

Goldman viewed the jobs report as a close call but just strong enough for the Fed to move — until the August ISM nonmanufacturing data Tuesday fell sharply to 51.4, a level last seen in 2010.