Goldman Sachs: FOMC to Skip Rate Hike in October, December to Be Last

citing Chaoxiang Research, Goldman Sachs noted in its research report dated October 25, 2026, that the market prices in a peak federal funds rate of approximately 4.55%, implying a cumulative four rate hikes; Goldman Sachs' base case calls for only two hikes, ending at 3.25% to 3.5%; year-over-year core personal consumption expenditures (PCE) are 1.1 percentage points above the 2% target; and the financial conditions index (FCI) has tightened by 30 basis points since September.

Goldman Sachs anticipates that the October Federal Open Market Committee (FOMC) meeting will skip a rate hike, with the second and final hike taking place in December. Year-over-year core PCE stands 1.1 percentage points above the 2% target, collectively driven by tariffs, energy shocks from Iran, and AI-related price measurement errors. Tightening financial conditions equate to roughly one rate hike and do not substitute for one. The threshold for a March rate hike remains high, unless oil prices and inflation data deteriorate significantly. The market pricing in four hikes leans hawkish.