Goldman Sachs Sees Second Rate Hike in October, Abandons 'One and Done' Call

Goldman Sachs has revised its Federal Reserve rate hike forecast, now predicting a second 25 basis point increase in October. This change puts Goldman's timeline ahead of both JPMorgan and Morgan Stanley, which have been forecasting a December follow-up move.

The bank's economists noted that Wednesday's meeting was more hawkish than expected in three distinct respects: the updated dot plot showed a 16 to 2 majority of FOMC participants projecting at least one more hike this year, with no dissenting votes on the rate decision; the median funds rate projection remained elevated through 2029; and Chair Kevin Warsh characterized the hike as removing policy accommodation.

This shift narrows the gap between Goldman's dovish framing and the more hawkish calls already in place at rival banks. It also raises the prospect of a live October meeting, which some had previously flagged as unlikely due to its proximity to the November midterm elections.