Ms. Wilson-Elizondo said by email that she expects the Fed to deliver a "hawkish pause" on Wednesday and to "highlight the possibility of following a similar path to the Reserve Bank of Australia and the Bank of Canada, who both hiked after a pause."
GSAM had $2.67 trillion in assets under supervision as of the end of the first quarter.
David Nicholas, a Marietta, Ga.-based portfolio manager at ETF issuer XFUNDS, concurred that this CPI report will give the Fed justification to pause rate hikes and "see if the medicine is working."
Economists were expecting a 4.2% CPI figure for May, according to financial data firm FactSet Research Systems.
The monthly CPI has been steadily declining since reaching 9.1% in July 2022, which marked a 40-year high.
Excluding the volatile food and energy sectors, the core CPI rose by an annualized 5.3% in May.
Mr. Nicholas of XFUNDS cautioned that while the Fed has managed overall inflationary pressures up to this point, unfortunately, the core CPI remains stubbornly high. "So (Fed chief Jerome) Powell can't celebrate until we see some relief in the broader areas of the economy," he said.
XFUNDS has $35 million in assets under management.
The Fed's key short-term interest rate is now in a range of between 5% to 5.25% — the highest level since 2007 — after the central bank raised rates by 25 basis points at its May 3 meeting.
As of Tuesday morning, according to CME Group's FedWatch tool, shortly after the release of the CPI data, market participants' pricing of fed fund futures indicated there is a 95.3% probability that the Fed will keep rates unchanged when it issues its monetary policy decision on Wednesday and a 4.7% probability it will hike by 25 basis points.
Ms. Wilson-Elizondo of Goldman Sachs added that she has a "cautious" outlook on the markets and economy over the medium term.
"With inflation stubbornly high, we do see the business cycle eventually ending in recession, as the Fed will have to break the back of the labor market to make material progress toward their 2% (inflation) target," she said.