Goldman Sachs Revises Forecast to Expect a Fed Rate Hike in October
Goldman Sachs has revised its forecast for the Federal Reserve's interest rate policy, now expecting another quarter-percentage-point hike at the upcoming FOMC meeting on October 27-28. This shift comes after the Fed’s September decision raised rates to a range of 3.75%–4%, with all policymakers voting in favor and signaling continued hawkish intent due to persistent inflation driven by energy costs from geopolitical tensions, including the Iran War. Goldman Sachs cited three key reasons for its updated stance: an overwhelming majority projecting at least one more hike this year; a higher median funds rate outlook through 2029; and Fed Chairman Kevin Warsh’s emphasis on removing monetary accommodation. The firm now sees October as most likely for the next increase, with December not in its base case but still possible. The market is also pricing in an increasing likelihood of another hike before year-end, according to CME Group's FedWatch Tool. This shift reflects broader concerns about inflation remaining elevated and the need for continued tightening.
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Topics: Federal Reserve Goldman Sachs interest rates monetary policy