Goldman Sachs (NYSE:GS) has revised its Federal Reserve outlook after this week’s policy meeting, now projecting another quarter-point increase in October rather than treating September’s move as the last adjustment of 2026. The bank had previously expected a single hike this year.
That view changed after the Federal Open Market Committee (FOMC) raised the federal funds target range to 3.75%–4.00% and issued guidance that Goldman’s economists judged more hawkish than anticipated.
Chief US economist David Mericle cited several details: a 16-2 majority of officials projecting at least one additional increase in 2026, no dissent on the actual rate decision, a still-elevated median rate path through 2029, and an upward revision in the estimated longer-run neutral rate from 3.06% to 3.25%.
Chair Kevin Warsh also repeatedly described the September increase as having merely “removed a dose of accommodation,” language that implied policy was not yet restrictive enough.
Goldman now treats two 25-basis-point increases as the baseline for 2026.
The team argues October is the most natural date for the next step because officials framed further tightening as a way to support a “timelier return” to the 2% inflation goal.
Consecutive meetings, in that reading, would match the message the Committee just sent.
Extra moves beyond October remain possible but are not the bank’s central case.
The shift puts Goldman ahead of several large peers. JPMorgan and Morgan Stanley have pointed to December for a follow-up increase.
Bank of America is among the few other major houses expecting a more front-loaded path, with hikes in both October and December.
Markets have also repriced: CME FedWatch odds of another quarter-point move in October rose to roughly even after the meeting.
The timing is awkward.
The October gathering sits close to the midterm elections, a window some observers thought the Fed might prefer to avoid.
That calendar risk does not override Goldman’s reading of the Committee’s own projections and language.
Higher-for-longer rates would keep borrowing costs elevated for households and firms, support the dollar, and raise the discount rate used to value equities and other risk assets.
Gold and other non-yielding assets can also feel pressure when real yields stay high.
Context matters.
Inflation has remained above target amid supply shocks, tariffs, and other pressures, while the labor market has stayed resilient enough to reduce urgency for easing.
Earlier in 2026 Goldman had already dropped its call for rate cuts this year and pushed any easing into 2027.
The latest change is a further hawkish step: from “one and done” after September to an expected second increase only weeks later.The forecast is not a certainty.
Incoming inflation and jobs data, and any change in Warsh’s public tone, could still alter the path.
For now, Goldman’s economists have concluded that the Committee’s updated dots, its higher estimate of neutral, and the chair’s wording all point to another move in October as the most coherent follow-through.