Goldman Sachs has delayed its forecast for the first Federal Reserve rate cut to December 2026, pushing back its timeline by three months as sticky inflation and elevated energy prices persist above the central bank’s 2% target.
Quick Facts
- Goldman Sachs expects the Fed’s first rate cut in December 2026, followed by a second cut in March 2027
- The revision was announced in May 2026, citing inflation near 3% and resilient labor market strength
- The Fed currently holds interest rates steady in the 3.50% to 3.75% range
- April 2026 employment data showed job growth exceeded expectations, reinforcing the central bank’s cautious stance
The investment bank’s shift reflects broader Wall Street skepticism about near-term interest rate relief. In a May 8 note, Goldman Sachs analysts wrote that if the labor market does not weaken sufficiently this year, the Federal Open Market Committee would instead deliver two final cuts in 2027.
Goldman Sachs COO John Waldron reinforced this cautious outlook in early June, telling CNBC that inflation pressures make immediate rate cuts unlikely. April consumer price inflation surged 3.8% year-over-year, up from 3.3% in March, while the Fed’s preferred PCE gauge also ran hot at 3.8% headline and 3.3% core, both above the 2% target.
Goldman Sachs pushes Fed rate cut forecast to December 2026
Peso mexicano weakens to 17.48 against dollar as June volatility continues
Energy costs remain a key headwind. Gas prices, which spiked due to the Middle East conflict, continue to fuel broader price pressures across the economy. Combined with resilient employment—April jobs growth beat expectations and the unemployment rate held steady at 4.3%—the Fed has little incentive to ease policy soon.
Traders currently expect the central bank to hold rates steady in the 3.50% to 3.75% range through the end of 2026, aligning with Goldman Sachs’ revised forecast and signaling that Americans may face elevated borrowing costs for several more months.
Sources
- Reuters — Confirmed Goldman Sachs’ December 2026 rate cut forecast, reasons for revision, and current Fed rate levels
- TheStreet — Reported Goldman Sachs COO’s June 2026 comments on inflation and rate cut timing, evolution of the bank’s forecast
- TradingView — Documented sticky inflation near 3% as reason for forecast delay
