Goldman Sachs Delays Fed Rate-Cut Forecast to June and December 2027
GS•Goldman Sachs now expects the Fed to hold rates through 2026 and postpone its first rate cuts until June and December 2027, instead of December 2026 and March 2027. The shift reflects stronger payrolls that lower overheating risks and extend the pause until core PCE inflation nears 2%.
1. Forecast Revision
Goldman Sachs now projects the Fed will hold rates through 2026 and initiate rate cuts in June and December 2027, rather than December 2026 and March 2027, reflecting a longer expected pause in policy adjustments.
2. Data Drivers
The shift is driven by a stronger-than-expected May payroll report and resilient labor-market data, which reduce overheating risks and bolster the case for maintaining higher borrowing costs until core PCE inflation approaches 2%.
3. Market Implications
A prolonged pause may support higher short-term bond yields and stable trading volumes for Goldman Sachs’ fixed-income division, while delaying rate relief could temper refinancing activity and consumer credit demand.
