Goldman Says Tighter Conditions After Market Sell-Off Equates to Three Fed Hikes
Goldman Index Shows Market Volatility Doing Fed's Work
Federal Reserve policy makers may take a pass on raising rates next week if they decide the market has already done the tightening for them.
The recent stock market sell-off, an increase in corporate borrowing costs and the rise of the dollar have contributed to a tightening of financial conditions roughly equivalent to three 25 basis-point hikes in the central bank's benchmark federal funds rate, according to a Goldman Sachs Group Inc. report published late Thursday in New York.
The Goldman Sachs Financial Conditions Index -- a measure that incorporates variables like stock prices, credit spreads, interest rates, and the exchange rate -- rose to the highest level in five years at the end of August amid the most acute phase of the turmoil.