Goldman Sachs has added another 25-basis-point Federal Reserve interest rate hike to its projections—now penciled in for March 2027—following October inflation data that came in higher than anticipated. Core CPI rose by 0.30% in October, exceeding economists' expectations and marking the third consecutive month of 0.3% increases.
Goldman continues to expect the Fed to raise rates by 25 basis points in December. With the additional hike now projected for March 2027, the benchmark interest rate is expected to reach a range of 4.25%–4.5%. Goldman also noted that this third hike could potentially occur as early as January, though March is considered more likely.
This revised outlook follows evidence that price pressures have broadened, extending well beyond the direct impact of rising oil prices. Goldman observed that several CPI components show increases, signaling that inflationary pressure remains robust—a trend that suggests the Fed’s path toward lower interest rates will be more prolonged.
Previously, Fed Governor Christopher Waller suggested that a 50-basis-point hike in December should be considered if the October core CPI came in at or above 0.3%. Nevertheless, Goldman maintains its forecast for a 25-basis-point increase, anticipating that most Fed officials will remain cautious about taking more aggressive action.
On the other hand, Goldman expects inflationary pressures to begin easing as the impacts of rising energy costs, tariffs, and pressures related to the AI industry subside. The decline in oil prices since the U.S. election suggests that much of the upward pressure on consumer prices stemming from energy costs has already begun to fade.