As of October 4, 2026, Goldman Sachs expects one more quarter-point Federal Reserve rate increase this year, in December rather than October. It is a forecast, not a Federal Reserve decision—and Goldman says the Fed may decide it does not need to raise rates again if inflation continues to ease.
What Goldman Sachs expects now
Reuters reported on October 1 that Goldman had moved its expected next increase from October to December. The firm’s note said: “We are pushing back the second hike in our forecast to December, and we see a strong chance that the FOMC will ultimately conclude that additional rate hikes are unnecessary.” TheStreet later attributed the December forecast to Goldman chief economist Jan Hatzius.
In this context, a 25-basis-point increase means a quarter of a percentage point. The forecast describes Goldman’s view of a possible future move; it does not mean the Federal Open Market Committee (FOMC) has announced that move or committed to making it.
Why the forecast shifted from October to December
Reuters said the timing change followed softer-than-expected inflation data. Its October 1 report put U.S. PCE inflation in August 2026 at 3.4% year over year, below the 3.7% estimate from economists Reuters polled. Those figures are reported by Reuters; they are not independently verified here against an official statistical release.
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At the time of Reuters’s report, market-implied odds of an October quarter-point increase were about 38%, according to the CME Group FedWatch Tool. Reuters compared that snapshot with roughly 51% in the prior session and nearly 71% a week earlier. These are historical market snapshots, not current probabilities or a promise of what the Fed will do.
Could the Fed skip the December increase?
Yes. Goldman’s note explicitly allowed for the possibility that the FOMC would conclude additional increases were unnecessary. TheStreet’s October coverage said another soft inflation reading could further weaken the December call. The forecast is therefore conditional: inflation and other incoming economic information can change the expected path.
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Goldman’s September 23 discussion with Vice Chairman Rob Kaplan offers earlier context, not the latest forecast. Kaplan described a divided economy, with AI infrastructure and defense activity strong while interest-sensitive housing and autos were under strain. He said he would be inclined to skip October absent a reason to act then and look again at December. Reuters subsequently reported Goldman’s shift in timing, so Kaplan’s remarks should not be mistaken for the later Hatzius forecast.
How Goldman’s view differs from other rate signals
Several different kinds of information can sound like a prediction but answer different questions:
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|---|---|---|
| Goldman’s October forecast | One more 25-basis-point increase, expected in December 2026 as of October 4. | It is not an FOMC decision or guarantee. |
| Kaplan’s September 23 remarks | An earlier Goldman discussion framed one more increase to roughly 4%–4.25%, followed by a pause to reassess. | It is not the later Hatzius forecast or a current Fed commitment. |
| Market-implied odds reported by Reuters | A snapshot of pricing for an October move: about 38%, versus roughly 51% in the previous session and nearly 71% a week earlier. | It is not Goldman’s forecast or the Fed’s decision, and the figures are not current odds. |
Goldman’s June 9 outlook belongs to an earlier forecast period: it said the firm did not expect rate cuts until 2027, citing resilient activity and job growth, higher oil prices, tariffs, and core PCE inflation of 3.3% year over year in April 2026. That earlier outlook is useful historical context, not the October call on further hikes.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What a Fed hike or pause could mean for borrowing costs
A Fed policy-rate change is not the same thing as a mortgage-rate change. Long-term Treasury yields and other market conditions also influence long-term borrowing costs, so a pause by the Fed would not automatically bring mortgage rates down. Goldman’s forecast alone cannot determine what a household will pay to borrow.
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