Goldman Sachs Delays Fed Rate Cuts to 2027, Raises Hike Probability to 20%

According to Goldman Sachs, the firm no longer expects the Federal Reserve to cut rates this year due to a stronger-than-expected labor market. The bank pushed back its forecast for the final two Fed rate cuts from December 2026 and March 2027 to June and December 2027. However, Goldman's chief U.S. economist David Mericle noted that rate hikes remain unlikely given inflation appears "not self-sustaining." Goldman raised its probability of a small rate hike from 10% to 20%, while lowering the baseline probability of two 25-basis-point cuts next year from 40% to 30%. The firm also cut its 2026 U.S. unemployment rate forecast to 4.4%.
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