Goldman Sachs Adjusts October Rate Hike Outlook for the Fed

Goldman Sachs forecasts that the U.S. Federal Reserve (Fed) will raise the benchmark interest rate by 0.25 percentage points in October, following a similar increase in September. The revision of the initial prediction that September would be the last hike is attributed to the Fed's strong commitment to addressing inflation. At the September meeting, the benchmark rate was raised by 0.25 percentage points, adjusting the target range to 3.75% to 4.00% annually. Goldman Sachs sees a high likelihood of further increases at the October Federal Open Market Committee (FOMC) meeting, and according to the dot plot, 16 out of 18 members expect at least one more rate hike by 2026. JP Morgan and Morgan Stanley anticipate the next rate hike to occur in December, but Goldman Sachs analyzes that considering the Fed's inflation targets, consecutive hikes in the next two meetings would be natural. According to the Chicago Mercantile Exchange (CME) FedWatch, the market estimates about a 50% chance of an additional 0.25 percentage point increase in the October benchmark rate. However, the timing of the October FOMC meeting, which is just a week before the U.S. midterm elections, could pose a burden for the Fed.

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