Goldman's October hike call underscores renewed Fed tightening risks
TLT•Broader market expectations and peer forecasts
Morgan Stanley and Australia's Macquarie also added a March 2027 rate hike to their existing forecasts for a December increase.
Goldman said policymakers increasingly favored a quicker return of inflation to the Fed's 2% target, making October the most likely opening for the next move. The analysts inferred from the Fed's messaging that officials could favour consecutive rate increases rather than a more gradual approach.
The shift comes as markets increasingly embrace a "higher-for-longer" interest-rate outlook. Oil prices have climbed above $100 a barrel, adding to concerns that inflation pressures could remain persistent, while recent economic data have pointed to continued resilience in growth.
Goldman's revised forecast brings it in line with a growing number of brokerages expecting further tightening from the Fed. Bank of America Global Research has the most hawkish outlook, projecting rate hikes in both October and December.
Financial markets moved closer to that view after the Fed decision, with traders pricing roughly a 53% chance of an October rate increase and an 81% probability of a hike in December, according to CME FedWatch data.
Markets will also be watching policy decisions from the Bank of England, due later in the day, and the Bank of Japan on Friday for further clues on the global interest-rate outlook.
Goldman sees October as the next possible Fed hike
Goldman Sachs expects the US Federal Reserve to raise interest rates again in October after policymakers signaled they may need to tighten further to bring inflation back to target, following the central bank's first rate hike in three years.
The brokerage forecast a 25-basis-point increase at the Fed's October meeting after the central bank on Wednesday raised rates by a quarter point to a 3.75%-4.00% range.
The call marks a reversal from Goldman's previous expectation of a single rate hike by the Fed this year, underscoring how Wednesday's meeting prompted investors and economists to reassess the outlook for US interest rates.
