Goldman Sachs Lifts Core PCE Inflation Forecast to 3.05% After 2.4% CPI Drop
Goldman Sachs raised its core PCE inflation forecast for January to 3.05% from 2.8%, citing 0.40% month-on-month growth driven by electronics and IT commodity price increases. January CPI fell to 2.4%, the lowest since May, but PCE’s lighter used-car weighting means inflation stays higher for the Fed’s 2% target.
1. January CPI Decline
CPI inflation fell to 2.4% in January 2026, the lowest reading since May 2025 when tariffs took effect. The 0.3 percentage point decline from December’s 2.7% reflected lower used-car prices.
2. Goldman Sachs Raises PCE Outlook
Goldman Sachs now forecasts core PCE inflation at 3.05% for January, up from its prior 2.8% estimate. The revision is driven by a 0.40% month-over-month rise, led by increases in electronics and IT commodity costs.
3. Fed Policy Implications
With the Fed targeting a 2% core PCE rate, a 3.05% result could push back anticipated rate cuts. Investors may adjust their interest-rate expectations and portfolio positioning based on this higher inflation outlook.