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Goldman Sachs Expects Third Fed Rate Hike in March 2027, Delays Rate-Cut Forecast by a Quarter

Goldman Sachs now forecasts a third 25-basis-point U.S. Federal Reserve rate increase in March 2027, after expecting a second increase in December. It delayed its forecast for the start of rate cuts by one quarter, to December 2027, and kept its projected peak federal funds rate target at 3.25% to 3.5%.

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What happened

Goldman Sachs revised its Federal Reserve forecast after October inflation was hotter than expected for a third consecutive month. It now expects rate increases in December and March 2027, and expects rate cuts to begin in December 2027, one quarter later than before.

Global impact / market context

If rates stay higher for longer, borrowing may remain more expensive for households and businesses. The changed forecast may also affect how investors view the outlook, but it is Goldman Sachs’s expectation, not a confirmed Fed decision.

What to watch

  1. Check upcoming inflation reports: Goldman cited three months of worsening inflation news as the reason for its change.
  2. Check the Fed’s rate decisions in December and March 2027: Goldman expects increases, but those decisions are not confirmed.
  3. Check whether Goldman changes its December 2027 rate-cut forecast: it has pushed the expected start back by one quarter.

Affected assets

  • U.S. federal funds rate

Evidence