Goldman Sachs has adjusted its Federal Reserve policy outlook, delaying its forecast for the central bank’s next interest rate hike from October to December.
The shift follows softer-than-expected inflation metrics—specifically August core Personal Consumption Expenditures (PCE) data coming in near 3%—alongside more patient, dovish remarks from officials like New York Fed President John Williams, who indicated there is “no urgency to act”.
Key Highlights of the Policy Revision:
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Timeline Shift: Economists at the bank moved their second projected rate hike expectation from the October meeting to December, though they noted a strong possibility that the Federal Open Market Committee (FOMC) may ultimately conclude additional tightening is unnecessary.
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Cooling Expectations: Following the update, interest rate futures reflected a sharp drop in the probability of an October rate increase (falling to around 38% from over 70% a week prior).
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Broader Context: The Fed previously delivered a 25-basis-point hike in September (lifting the federal funds rate range to 3.75%–4.00%), marking its first rate increase in three years. Analysts are closely tracking upcoming economic indicators, including the crucial U.S. nonfarm payrolls report, to gauge the path forward for year-end monetary policy.
