Goldman Sachs updates Fed rate forecast

The bank maintained its forecast for a 25-basis-point rate hike in December and added a third 25-basis-point increase at the March 2027 meeting to its projections. Goldman Sachs Chief U.S. Economist David Mericle stated that the third rate hike could also occur in January, although March is considered more likely.

The bank expects the inflationary impact of energy prices, tariffs, and artificial intelligence-related cost pressures to diminish over time. However, with price increases potentially accelerating again early in the year, the Fed may need to maintain restrictive monetary policy for longer. Goldman Sachs also postponed its forecast for the beginning of interest rate cuts by one quarter, pushing the expected start to December 2027.