Goldman Sachs: The Federal Reserve is expected to raise interest rates by another 0.25% in October

The Zhitong Finance App learned that Goldman Sachs released a research report saying that the US Federal Open Market Committee (FOMC) raised the federal funds rate by 25 basis points to 3.75-4%. Although the market generally expected this rate hike, this meeting was more hawkish than the bank's expectations. Currently, the FOMC will raise interest rates by another 25 basis points in October. Previously, the forecast was that September would be the only rate hike.

The bank believes that a continuous rate hike is the most natural policy choice because it is in line with the FOMC's stated target of a “more timely return” of 2%, but further rate hikes are not in its benchmark situation. One reason is that the bank's forecast for core personal consumption inflation is still lower than the FOMC members' median forecast. The bank's forecasts for the fourth quarter of this year and the fourth quarter of next year are 3.2% and 2.2%, respectively, while the FOMC median is 3.4% and 2.5%.

Goldman Sachs kept its terminal interest rate forecast of 3.25-3.5% unchanged, reflecting the 25 basis point reduction forecasts for September and December 2027 and March 2028.