Goldman Sachs stock shifts Fed outlook after hot inflation data

Goldman Sachs changed its Federal Reserve outlook after October inflation came in hotter than expected. In a report covered by Reuters on Wednesday, November 11, the bank forecast another 25-basis-point rate increase in March 2027.

Goldman had previously expected the Federal Reserve to complete its rate increases in December. The change followed a third consecutive month of upside inflation surprises, according to Reuters. Markets were fully pricing a 25-basis-point increase for the December 9 meeting.

Inflation keeps policy restrictive

Goldman Sachs chief U.S. economist David Mericle said a March increase now appears more likely than a January move. The bank expects inflation to ease toward the end of 2026 before renewed cost pressures at the start of 2027 could justify another increase.

Mericle also said the recent inflation readings could lead most Federal Open Market Committee members to signal a third increase in the December projections. Goldman still expects the energy shock to fade, but it sees elevated costs, tariffs, resilient consumer demand and strong artificial-intelligence investment as factors that could keep price pressure firm.

Rate cuts move further out

The revised path would keep monetary policy restrictive for longer. Goldman now expects rate cuts to begin in December 2027, three months later than its previous forecast, followed by additional reductions in March, June and September 2028. It kept its eventual federal funds rate forecast at 3.25% to 3.5%.

For investors, the change raises the importance of interest-rate expectations for financial stocks and capital-market activity. A longer period of elevated rates can support net interest income in parts of banking, while it can also weigh on valuations and the pace of transactions. The Reuters report did not link the forecast change to a specific move in Goldman Sachs stock.

Goldman Sachs stock traded at 826.60 euros on Lang & Schwarz at 13:23 CET on Wednesday, November 11.

Broader trading conditions remain relevant for financial shares through the S&P 500.

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