Goldman Sachs Reverses Federal Reserve Forecast, Expects 25-Basis-Point Rate Hike

Goldman Sachs has abandoned its forecast that the Federal Reserve would keep interest rates unchanged through 2026, instead projecting a 25-basis-point rate increase at the central bank’s next meeting.

Inflation Data Shifts Rate Expectations

The revised outlook follows a hotter-than-expected inflation reading that pushed market-implied odds of a rate hike above 86%. The data prompted a sharp reassessment of expectations for the Federal Reserve’s policy path.

Goldman Sachs had previously maintained that the central bank would remain on hold. As recently as July 31, the investment bank was among the most prominent institutions forecasting no change in rates through 2026.

Potential Impact on Financial Markets

A higher interest-rate outlook can affect borrowing costs, bond yields and risk appetite across global markets. Cryptocurrency markets are also sensitive to changes in monetary policy, as tighter financial conditions can reduce demand for higher-risk assets.

Goldman Sachs’ forecast remains an expectation rather than a confirmed policy decision. The Federal Reserve will determine its next move based on incoming inflation, employment and economic-growth data.