Goldman Sachs Sees October Fed Pause, Possible Final Hike in December

Goldman Sachs expects the Federal Reserve to keep interest rates unchanged on Oct. 28, while leaving open the possibility of one final increase in December as it weighs persistent inflation and financial conditions.

The bank says its financial conditions index has tightened by about 30 basis points since September. Goldman views that shift as too small to replace another rate increase and says tighter conditions alone do not signal that the Fed’s hiking cycle is ending.

The forecast marks a change from Goldman’s previously outlined possibility of rate increases in both December and March 2027. The bank’s current base case does not include a March increase.

Goldman expects U.S. inflation to improve in 2027 as the effects of tariffs, energy shocks and AI-related price pressures fade. An escalation in the Middle East that pushes oil prices higher, alongside persistent inflation, could change the Fed’s policy path.

The Fed is scheduled to announce its decision at 2 p.m. ET Wednesday, Oct. 28, followed by a news conference at 2:30 p.m. ET.