Goldman adds March 2027 Fed hike, sees rates at 4.25–4.50 percent
Goldman Sachs now expects the Federal Reserve to lift its benchmark rate twice more, taking the target range to 4.25–4.50 percent by March 2027, after October inflation data delivered a third consecutive month of upside surprises.
The bank added a 25-basis-point increase in March 2027 to the quarter-point move it already forecasts for December 8–9, when the Federal Open Market Committee meets. From the current 3.75–4 percent range, a December rise would take it to 4–4.25 percent, with March completing the path. Goldman had previously expected the cycle to end in December.
David Mericle, Chief U.S. Economist at Goldman Sachs Research, said the bank saw a third increase as more likely in March than January because inflation could ease toward the end of 2026 before strengthening again early next year. He said Goldman suspected the recent inflation readings would lead most FOMC participants to signal a third hike in the December dot plot.
Official data showed October CPI up 0.4 percent month on month after 0.6 percent in September, with core CPI up 0.3 percent for a third straight month. Shelter rose 0.3 percent, food 0.5 percent and energy 0.7 percent. The Bureau of Labor Statistics could not publish 12-month October rates for most categories because survey data were not collected in October 2025 during a lapse in government appropriations, so the monthly figures carry the signal.
Fed Governor Christopher Waller has said September headline PCE inflation reached 3.7 percent year on year and core PCE 3.1 percent, both above the 2 percent goal, and that a 50-basis-point move deserved consideration if monthly core CPI came in at 0.3 percent or higher. The October reading met that threshold, though the committee has not committed to a half-point increase; it voted 10–2 to hold in October, with Lisa D. Cook and Beth M. Hammack dissenting in favour of a quarter-point rise. Markets priced about an 89 percent chance of a 25-basis-point December increase and 11 percent for 50 basis points, and the dollar traded near a 19-month high. Goldman now sees the first cut in December 2027, three months later than before, followed by quarter-point cuts in March, June and September 2028.
