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As of October 4, 2026, Goldman Sachs expects the Federal Reserve to raise its benchmark rate by 25 basis points once more, in December—not October. The forecast is uncertain: Goldman says there is a strong chance the Federal Open Market Committee (FOMC) will decide that no further hikes are needed if inflation continues to cool. This is Goldman’s forecast, not a Fed decision.
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.” Reuters’ October 1 report attributes the note to Goldman Sachs. TheStreet’s coverage attributes the December call to chief economist Jan Hatzius and says another soft inflation reading could weaken it further: TheStreet’s report.
That leaves two plausible outcomes in Goldman’s own framing: one more quarter-point hike in December, or no additional increase if incoming inflation data persuade policymakers that further tightening is unnecessary. “One more” is therefore a conditional forecast, not a firm promise about what the Fed will do.
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The timing change followed a softer-than-expected inflation reading. Reuters reported that US PCE inflation in August 2026 was 3.4% year over year, below the 3.7% estimate from economists it polled. Those figures are Reuters-reported, not independently verified here against an official statistical release. A cooler reading can reduce the perceived need to raise rates immediately, though it does not settle the Fed’s decision.
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Reuters also reported a snapshot of market expectations for an October quarter-point increase: about 38%, compared with roughly 51% in the prior session and nearly 71% a week earlier, based on CME Group’s FedWatch Tool. These were probabilities at the time of Reuters’ report, not current odds or a prediction that the Fed would necessarily act.
How to read the different rate forecasts
Several statements about future rates can sound contradictory because they refer to different dates, people, and measures. The October 1 Reuters report describes Goldman’s later forecast change; Goldman Sachs’s September 23 interview with Rob Kaplan supplies earlier context, not the same forecast.
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| View | What it says | How to interpret it |
|---|---|---|
| Goldman forecast reported October 1, 2026 | One further 25-basis-point hike, moved from October to December; Goldman also sees a strong chance of no more hikes. | A forecast attributed to a Goldman note, not an FOMC decision. Reuters |
| Rob Kaplan interview, September 23, 2026 | One more increase to roughly 4%–4.25%, followed by a pause to reassess. | Kaplan is Goldman Sachs vice chairman and a former Dallas Fed president. This earlier interview is useful context, but it is not the later Hatzius forecast. Goldman Sachs Exchanges |
| Market-implied October odds in Reuters’ report | About 38% for an October quarter-point hike at the reported snapshot. | A market-based probability that can change, not a Goldman forecast or an official Fed projection. Reuters |
Kaplan described an uneven economy in the September interview: AI infrastructure and defense activity were strong, while interest-sensitive housing and autos faced strain. He said he would be inclined to skip October absent a reason to act, then reconsider a December move. His remarks help explain why a pause might be considered, but they should not be substituted for the later forecast attributed to Hatzius. The Goldman Sachs transcript records the discussion.
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What could make the December hike unnecessary
The clearest stated condition is further easing in inflation. Goldman’s note explicitly says the FOMC may conclude additional increases are unnecessary; TheStreet’s October coverage says another soft inflation reading could further weaken the case for a hike. A single report does not guarantee that outcome: policymakers assess incoming economic evidence, and the sources cited here do not establish what the FOMC will decide.
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For background only, Goldman Sachs Research’s June 9 outlook expected no rate cuts until 2027, citing resilient activity and job growth, higher oil prices, tariffs, and 3.3% year-over-year core PCE inflation in April 2026. That was an earlier outlook with a different baseline and should not be mistaken for the October forecast for a further hike. Goldman Sachs Research’s June outlook.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Does a Fed hike or pause determine mortgage rates?
No. The Fed’s benchmark policy rate and the rates consumers pay on mortgages and other longer-term borrowing are related, but they are not identical. Long-term Treasury yields and broader market conditions also influence long-term borrowing costs. A Fed pause would not, by itself, guarantee that mortgage rates fall; likewise, a forecast of one more hike does not establish the direction of every consumer loan rate.
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