Goldman Sachs Forecasts Another Fed Rate Hike Amid Persistent Inflation

Following three consecutive months of hotter-than-expected inflation data, major investment bank Goldman Sachs has updated its monetary policy outlook for the US Federal Reserve. The bank now expects the Fed to implement a 25-basis-point rate hike in December, followed by an additional hike in March 2027 (or potentially as early as January).

According to a note by David Mericle, Goldman’s chief US economist, ongoing inflationary pressures driven by energy shocks, tariffs, and AI-related costs have forced policymakers to extend their restrictive policy cycle.

Key Takeaways from the Revised Outlook:

1. Multiple Rate Hikes: Goldman Sachs still anticipates a 25 bps rate hike at the Fed’s December 8–9 meeting—marking the second hike of the current tightening cycle—and has now added a third hike penciled in for March 2027. This move could potentially be brought forward to January due to early-year price increases.
2. Delayed Rate Cuts: With this revised scenario, Goldman has pushed back its forecast for the Fed’s first rate cut by a quarter, moving it to December 2027.
3. Fed Officials’ Stance: This shift aligns with recent comments from Federal Reserve officials, including Philadelphia Fed President Anna Paulson and Chicago Fed President Austan Goolsbee, who described the latest CPI report as deeply concerning.

Despite these adjustments, Goldman Sachs remains confident that as the effects of the energy shock (exacerbated by Middle Eastern tensions and oil market dynamics), tariffs, and AI price pressures fade, inflation will move meaningfully lower by the end of 2027. Traders will be closely watching the upcoming December FOMC meeting and dot plot for further signals on the Fed’s next moves.