In a notable shift in Wall Street expectations, Goldman Sachs now forecasts that the U.S. Federal Reserve will implement another 25-basis-point interest rate hike in October, moving away from its earlier view that the central bank’s tightening cycle would conclude following a September rate increase.
Key Takeaways from the Revised Outlook
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Hawkish Policy Signals: The revision follows the Fed’s decision to raise its benchmark interest rate by 25 basis points to a range of 3.75%–4.00%, alongside updated projections showing a strong majority of policymakers favoring further action to anchor inflation closer to its 2% target.
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The “Two-Hike” Baseline: Goldman’s updated assessment points to a two-hike baseline for 2026, driven by comments from Fed Chair Kevin Warsh indicating that the current policy stance remains partially accommodative.
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Broader Wall Street Consensus: While market pricing via CME Group’s FedWatch tool currently indicates roughly a 50% probability of an October move, Goldman joins Bank of America Global Research among major brokerages anticipating a more aggressive tightening path (with BofA projecting hikes in both October and December).
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Global Monetary Watch: Attention now turns to upcoming central bank decisions from the Bank of England and the Bank of Japan to gauge broader global liquidity and rate trajectories.
