Goldman Sachs stock faces a later path to Fed rate cuts

Goldman Sachs has added a March 2027 interest-rate increase to its US outlook after hotter-than-expected October inflation data. Reuters reported the change on Wednesday, November 11, citing a note from Goldman chief US economist David Mericle.

Goldman still expects the Federal Reserve to raise its benchmark rate by 25 basis points at the December 8-9 meeting. The bank had previously expected the tightening cycle to end with that move. The revised view now calls for another quarter-point increase in March, although Mericle said a January move remained possible.

Inflation changes the policy path

October inflation marked the third consecutive month of upside surprises, according to Reuters. Goldman expects inflation to ease through the end of 2026 before renewed price pressure at the start of 2027 creates a case for another increase. The bank's forecast therefore places the next hike in March rather than January.

Goldman's call reflects several forces affecting the inflation outlook. Reuters cited higher oil prices, US import tariffs, resilient consumer demand and strong investment linked to artificial intelligence. Federal Reserve Governor Christopher Waller has also indicated that policymakers could consider a larger December increase if price pressures accelerate.

Market expectations for a 50-basis-point move increased after Waller's comments and the inflation report, but Reuters said the outcome was not considered certain. Goldman continues to expect a 25-basis-point increase in December.

Rate cuts move further out

The change affects the expected timing of monetary easing. Goldman now sees the first rate cut in December 2027, three months later than in its previous forecast. Further reductions are expected in March, June and September 2028.

For investors, the revised path is relevant because higher rates can influence financing conditions, trading activity, asset valuations and demand for investment-banking services. The report does not establish a direct one-day cause for the stock's movement, but it adds a more restrictive interest-rate scenario to the backdrop for financial companies.

Goldman Sachs stock traded at 837.60 euros on Lang & Schwarz at 13:31 CET on Thursday, November 12.

The broader US equity backdrop can be followed in the S&P 500 market coverage.

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