Goldman Sachs on Fed - FJElite

We continue to expect a second 25bp rate hike in December and are adding a third 25bp hike to our forecast in March 2027. A third hike could come earlier in January, but we think March is a bit more likely because we expect the November and December inflation reports to be softer but then expect larger start-of-the-year price increases amidst ongoing cost pressures to boost inflation in January We remain confident that inflation will be meaningfully lower by the end of 2027 as the effects of tariffs, the energy shock, and AI price pressures diminish But we suspect that the recent inflation prints will lead most FOMC participants to signal a third hike in the December dot plot and that a firmer January inflation report would make delivering it the path of least resistance even if the energy shock appears over by then We have left our forecast for the eventual terminal fed funds rate unchanged at 3.25-3.5%, but we now expect rate cuts to begin one quarter later in December 2027 (vs. September 2027 previously), followed by additional cuts in March, June, and September 2028.