Goldman Sachs added a quarter-point Federal Reserve rate hike in March 2027 after October inflation came in hot, and it still expects another increase in December. Reuters said the bank dropped its call that the hiking cycle would end in December. Chief US economist David Mericle wrote that October was a third straight month of worse inflation news. The October CPI print, a 0.4% rise with core at 0.3%, is in Tuesday's economy note.
March is the base case, and January is still possible
InvestingLive said Goldman still forecasts a 25 basis point rise at the 8-9 December meeting, which would be the second hike of this cycle after September. The new March call would be the third. Mericle said the extra move could come in January, but March is a bit more likely because November and December inflation reports should be milder, with larger start-of-year price increases then lifting the January figures. He expects most Federal Open Market Committee participants to signal that third hike in the December dot plot. A strong January inflation report, he wrote, would make delivering it the path of least resistance, even if the energy shock looks finished by then.
The first rate cut moved later as well. Reuters said Goldman now sees cuts starting in December 2027, three months later than before, then further cuts in March, June, and September 2028. Coinlive, citing Sina Finance, said the bank left its longer-run funds-rate forecast unchanged at 3.25% to 3.5%. That is a delayed turn, not a new peak. In late October Goldman had taken a March hike out of its base case and warned that higher oil plus sticky prices could put it back. Tuesday's CPI did that.
Markets now treat a December hike as the default
Traders moved with the banks. Reuters said CME FedWatch showed markets fully expecting a 25 basis point hike on 9 December. The policy rate is still 3.75% to 4% after October's hold. Deutsche Bank is a step ahead of Goldman: Reuters said it expects an extra quarter-point in January on top of increases in December and March. Higher living costs also fed voter anger. Reuters noted that inflation, lifted by oil during the Iran war, import tariffs, firm consumer demand, and heavy spending on artificial intelligence, added to dissatisfaction that showed up in last week's midterm losses for the Republican Party.
What crypto and the next data release are watching
A longer hiking path raises the yield on cash and short-term Treasuries, which competes with bitcoin, an asset that pays nothing. The coin held near $74,000 on Wednesday as spot ETFs lost another $95 million, in today's markets note. Wednesday is Veterans Day. US bond markets are closed on SIFMA's recommendation, and stock markets stay open, so yields will not fully reprice until Thursday. Producer prices land on Friday, 13 November. Gold near $4,051 and Brent back toward $92 are in the commodities update. Follow the rate path on the economy desk.