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As of October 4, 2026, Goldman Sachs expects one more quarter-point Federal Reserve rate increase in December, not October. The call is a forecast, not a Fed decision—and Goldman says the Federal Open Market Committee (FOMC) may decide that further increases are unnecessary if inflation keeps easing.
What Goldman Sachs expects now
Reuters reported on October 1 that Goldman had moved its expected next increase from October to December. The firm’s note said: “We are pushing back the second hike in our forecast to December, and we see a strong chance that the FOMC will ultimately conclude that additional rate hikes are unnecessary.” TheStreet attributed the forecast to Goldman chief economist Jan Hatzius and reported that another soft inflation reading could weaken the case for a hike further.
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That leaves two plausible outcomes in Goldman’s account: one more quarter-point increase in December, or no further increase if the FOMC concludes it is not needed. Goldman’s forecast does not establish what the Fed will decide. Reuters’ October 1 report is the latest direct account of the timing change in the sources available here; TheStreet’s coverage adds the Hatzius attribution.
Why Goldman pushed the expected hike back
The timing shift followed a softer-than-expected inflation reading. Reuters reported that US PCE inflation rose 3.4% year over year in August 2026, below the 3.7% estimate from economists it polled. Those figures are as reported by Reuters, not an independently verified statistical release here. A further soft reading could make another increase less compelling, consistent with Goldman’s stated possibility that the FOMC may forgo additional hikes.
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At the time of Reuters’ report, CME Group’s FedWatch Tool implied about a 38% probability of an October quarter-point increase, compared with roughly 51% in the prior session and nearly 71% a week earlier. These are snapshots reported at that time, not current odds or a promise about what the Fed would do.
How to read the earlier Goldman comments
On September 23, Goldman Sachs Vice Chairman and former Dallas Fed President Rob Kaplan discussed the possibility of one more increase to roughly 4%–4.25%, followed by a pause to reassess. He described a split economy: AI infrastructure and defense activity were strong, while rate-sensitive housing and autos were strained. Kaplan said he would be inclined to skip October absent a reason to act, then look again at a possible December move.
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Kaplan’s remarks provide context for the limited-hikes outlook, but they are not the same as the later forecast attributed to Hatzius. Reuters subsequently reported that Goldman changed its expected timing from October to December. Read Goldman’s September 23 interview and transcript with that chronology in mind.
What this forecast does—and does not—tell you
- Goldman’s forecast: the firm’s expectation about a possible future policy move; it is conditional and could change with the data.
- The FOMC’s decision: the committee’s actual policy choice. Goldman’s view is not an announcement or official projection from the Federal Reserve.
- Market-implied odds: futures-based probabilities can move as new information arrives. Reuters’ October-hike odds are historical snapshots, not today’s probabilities.
- Long-term borrowing rates: mortgage rates and other longer-term rates are influenced by bond yields and broader market conditions, not just the Fed’s policy rate. A pause would not automatically make them fall.
How this differs from Goldman’s June outlook
In a June 9 outlook, Goldman Sachs Research said it did not expect the Fed to lower rates until 2027, citing resilient activity and job growth, higher oil prices, tariffs and core PCE inflation of 3.3% year over year in April 2026. Its baseline then projected cuts in June and December 2027. That was an earlier outlook, not the October forecast for possible hikes; subsequent policy and economic data changed the setting. Goldman’s June explainer describes that earlier view.
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What to watch next
- Whether upcoming inflation readings continue to cool or instead remain firm.
- Whether Goldman maintains the December call or drops it as the data change.
- The FOMC’s own communications and eventual policy decision, separate from analyst forecasts and market pricing.
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