PomegraFed Rate Peak Rises to 4.5% as Goldman Adds Hike on Inflation
Why is Goldman expecting another Fed rate hike?
Goldman Sachs (GS) added a March 2027 Fed rate hike to its forecast on Wednesday, lifting the expected peak to 4.25%–4.5%, after October inflation rose 0.4% and Goolsbee called it “borderline disturbing”.
Key numbers
| October CPI (monthly) | +0.4%vs 0.3% expected |
|---|---|
| Core CPI (monthly) | +0.3%vs 0.2% expected |
| Fed funds range today | 3.75%–4.00%Goldman sees 4.25%–4.5% peak |
| Half-point Dec hike odds (per [2]) | 13.6%from near zero before CPI; [4] shows 11.5% |
| First rate cut (Goldman) | Dec 2027pushed back one quarter |
What happened
Goldman Sachs (GS) added a March 2027 Fed rate hike to its forecast on Wednesday, lifting the expected peak to 4.25%–4.5%, after October inflation rose 0.4% and Goolsbee called it “borderline disturbing”. Consumer prices rose 0.4% in October, more than the 0.3% economists expected, and prices excluding food and energy (core inflation) rose 0.3% against 0.2% expected. Goldman now expects quarter-point Fed hikes in December and March, with the first cut pushed back to December 2027. Goolsbee said the most troubling part was that the cost of services is not coming down.
Why it matters
Goldman Sachs (GS) now expects the Fed to raise interest rates twice more, which could keep borrowing for homes, cars and credit cards expensive for longer. The Fed raises rates to slow price increases, and today's range is 3.75%–4%. Some Fed officials are also discussing a bigger half-point step in December, though traders see a quarter-point move as far more likely.
Who this affects
- MarketbearishMedium impact
- Stocks fell and bond yields jumped after the inflation report.
- CompanyneutralLow impact
- Goldman's call matches market pricing; no direct earnings effect.
- CompetitorsneutralMedium impact
- Other forecasters may follow; Fed officials lean toward more hikes.
- IndustrybearishMedium impact
- Borrowers face higher loan and mortgage costs if hikes continue.
Federal Reserve vs ECB, Bank of England, Bank of Japan
| Federal Reserve— | 3.75%–4.00% | Held Oct 28 | Dec 8–9 |
|---|---|---|---|
| European Central Bank— | 2.50% | Held Oct 29 | Dec 17–18 |
| Bank of England— | 4.00% | Hiked Nov 5 | Dec 17 |
| Bank of Japan— | ~1.25% | Held Oct 30 | Dec 17–18 |
As of 2026-11-05
How we got here
Fed holds rates at 3.75%–4.00% at its October meeting.
Government report shows October prices up 0.4%, above forecasts; Waller says half-point hike could be considered.
Goolsbee calls the report “borderline disturbing” on PBS NewsHour.
Goldman adds a March 2027 hike, lifting its expected peak to 4.25%–4.5%.
What to watch
- Fed decision: quarter-point or half-point hike, with traders fully pricing at least a quarter-point2026-12-09
- Whether more Fed officials back a faster pace, as Waller and Logan have signaled2026-12-09
- Goldman's second hike could come as early as January rather than MarchQ1 2027
Educational content only. Not investment advice.
More briefsAll briefs →
UK GDP Grows 0.7% in Q3 as AI and Cloud Services Lead
Sterling (GBP/USD) slipped about 0.2% to near $1.33, even as UK output hit its fastest pace since early 2024.
Sonos Stock Jumps 12.9% After Earnings Beat
Sonos (SONO) also approved a $150M buyback, but memory-chip costs are cutting into its profit margins.
Oil Drops to $91 on Saudi, Iraq Output Surge
Brent crude (BZ=F) slipped as Saudi Arabia lifted output 26% to 10.56M barrels a day and Iraq neared 4.9M.