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Goldman Sachs drops call that December is the Fed's last hike, adds March 2027 hike
What happened
After Tuesday's hot October CPI report, Goldman Sachs' US Economics team (led by David Mericle) dropped its call that the Fed's December hike would be the last of the cycle. Goldman now expects another quarter-point hike in March 2027, taking the fed funds rate to a peak of 4.25% to 4.5%, up from 3.75% to 4% today, and pushed its first rate cut back a quarter to December 2027. Goldman still expects a 25bp hike at the Fed's December 8-9 meeting and left its estimate of the terminal rate once cuts begin unchanged at 3.25% to 3.5%.
Why it matters & what’s next are part of Pro, along with the audio summary.
Start your free 14-day trialWho’s affected
- Broad market (S&P 500, Nasdaq) — higher-for-longer rates pressure valuations, especially growth/AI stocks. Treasury-sensitive sectors (housing, small caps, REITs) — the 10-year yield touched 5.03% on Tuesday. Financials — higher rates can support net interest margins. Rate-sensitive growth names (Mag 7, semiconductors) — the Nasdaq fell 0.7% Tuesday on the CPI print.