Goldman Sachs: FOMC to Skip Rate Hike in October, December to Be Last

According to TechFlow, citing Chaoxiang Research, Goldman Sachs noted in its research report dated October 25, 2026, that the market prices in a peak federal funds rate of approximately 4.55%, implying a cumulative four rate hikes; Goldman Sachs' base case calls for only two hikes, ending at 3.25% to 3.5%; year-over-year core personal consumption expenditures (PCE) are 1.1 percentage points above the 2% target; and the financial conditions index (FCI) has tightened by 30 basis points since September.

Goldman Sachs anticipates that the October Federal Open Market Committee (FOMC) meeting will skip a rate hike, with the second and final hike taking place in December. Year-over-year core PCE stands 1.1 percentage points above the 2% target, collectively driven by tariffs, energy shocks from Iran, and AI-related price measurement errors. Tightening financial conditions equate to roughly one rate hike and do not substitute for one. The threshold for a March rate hike remains high, unless oil prices and inflation data deteriorate significantly. The market pricing in four hikes leans hawkish.