Current money market pricing indicates a 31.5% probability of a Federal Reserve rate hike this week, though the prevailing market expectation remains that rates will be unchanged.

On July 27, Goldman Sachs analysts stated in a report that they expect the Federal Reserve to maintain the federal funds rate at its upcoming meeting. The impact of this decision will largely depend on how Fed Chair Powell explains the rationale and the future policy pathway. Analysts suggested that if the Fed decides to hold steady but fails to provide sufficient guidance on the economic outlook or its policy reaction function, the currently stable long-term US Treasury yield curve and the contained inflation risk premium could face increased volatility.

Current money market pricing indicates a 31.5% probability of a Federal Reserve rate hike this week, though the prevailing market expectation remains that rates will be unchanged.