Goldman adds another rate hike to Fed outlook after hot inflation data
TLT•Goldman Sachs now forecasts a 25-basis-point Fed rate hike in March after hotter-than-expected October inflation data, and expects rate cuts to begin in December 2027, three months later than previously forecast. Deutsche Bank expects an additional quarter-point hike in January.
1. Goldman changes forecast
Goldman Sachs forecast a 25-basis-point Federal Reserve rate increase in March after October inflation data came in hotter than expected, changing its call for the hiking cycle to end in December. The brokerage said a March hike is more likely than one in January, as it expects inflation to ease through year-end before renewed start-of-the-year price pressures.
2. Rate-cut timing shifts
Goldman now expects rate cuts to begin in December 2027, three months later than previously forecast, followed by cuts in March, June and September 2028. Deutsche Bank expects an additional quarter-point hike in January, in addition to increases in December and March.
3. Inflation surprises
Tuesday’s inflation data marked a third consecutive month of upside surprises, and markets fully expected a 25-basis-point hike on December 9. Goldman chief U.S. economist David Mericle said recent inflation readings could lead most FOMC participants to signal a third hike in the December dot plot.
