Goldman Sachs pushes Fed cuts to Dec. 2026 and Mar. 2027

Goldman Sachs pushed back its forecast for the next two Federal Reserve rate cuts to Dec. 2026 and Mar. 2027, citing expectations that energy-driven price pressures will keep core Personal Consumption Expenditures inflation near 3% through 2026.

Goldman’s US economics team wrote that energy cost pass-through into broader prices is likely to prevent core PCE-the Fed’s preferred inflation measure-from returning to 2% in 2026. The bank added that cooler monthly inflation readings and weaker labor-market data would be needed before policymakers would lower the federal funds rate. The International Monetary Fund projects core PCE would not fall to 2% until early 2027.

At its April 29 meeting the Federal Open Market Committee held the federal funds rate at 3.50% to 3.75%. That meeting produced four dissents, the most at a meeting since 1992.

Market indicators point to a high probability of no change at the June 17 meeting: the CME FedWatch tool places roughly a 93% chance the Fed will hold rates then. Investors and traders are focused on upcoming PCE inflation readings and the June FOMC decision for the next directional signals.

Lindsay Rosner of Goldman Sachs Asset Management wrote: “The FOMC could well feel compelled to remove the easing bias from its next post-meeting statement in June, which would suggest the hawks are gaining the upper hand on the committee.”

A delay in rate cuts reduces liquidity available for risk assets. A higher-for-longer outlook has coincided with a stronger dollar and downward pressure on valuations in parts of the cryptocurrency market. Traders and portfolio managers report that altcoins often see the heaviest selling when liquidity tightens, while some investors view Bitcoin as an inflation hedge if energy-related price pressures intensify.

Some firms have already priced in minimal easing in 2026. Executives at SoFi, speaking on their recent earnings call, indicated they expect no rate cuts in 2026. Other market participants continue to weigh whether at least one cut could still occur by year-end if economic data weakens.

Core PCE excludes food and energy to show underlying inflation trends. The Federal Reserve’s 2% target is its long-run inflation goal.