Goldman Sachs expects the Federal Reserve to raise interest rates again in December, as tighter financial conditions are insufficient to alter the policy path.

on October 26, according to a Goldman Sachs report, the Federal Reserve is expected to pause rate hikes at its October meeting, but may implement the final rate hike of this cycle in December. Goldman Sachs noted that the financial conditions index (FCI) has tightened by approximately 30 basis points since September, which is insufficient to substitute for further rate hikes; markets should not interpret tightening financial conditions as a signal that the rate-hiking cycle is nearing its end.

Goldman Sachs expects that as the impacts of tariffs, energy shocks, and AI-related price pressures gradually subside, U.S. inflation will improve in 2027. Under the baseline scenario, the Fed will not raise rates in March 2027. However, if escalation in the Middle East drives oil prices further higher, sustaining inflationary pressures, it could still alter the subsequent policy path.