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Goldman Sachs pushes Fed cut view into 2027 as labour strength delays easing

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Goldman Sachs pushes Fed cut view into 2027 as labour strength delays easing

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  • GS now expects the final two Fed rate cuts in June and December 2027, with no cuts seen this year.
  • It says that stronger-than-expected labour market activity supports delaying further easing until tariff, war and AI-demand effects fade, and core PCE inflation nears 2%.
  • Goldman raised the probability of modest rate hikes to 20% (from 10%), though its baseline remains that hikes are unlikely as inflation appears unlikely to become self-sustaining; it assigned only a 30% probability to its baseline of two 25bps cuts in 2027.
  • GS adds that rate hikes remain unlikely, though slightly more likely than previously thought; the terminal rate forecast stays at 3-3.25%.
  • The bank revised its 2026 US unemployment forecast down to 4.4% (from 4.6%).

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