Goldman Sachs Delays Expected Fed Rate Cuts to June and December 2027

Goldman Sachs economists said they no longer expect the Federal Reserve to cut interest rates this year, citing a stronger-than-expected labor market. According to Jin10, the bank pushed back the timing of the last two expected rate cuts to December 2027 and June 2027 from December 2026 and March 2027. Goldman Sachs Chief U.S. Economist David Mericle said the likelihood of Fed rate hikes remained low because inflation “seems unlikely to become self-sustaining.” The bank said U.S. job growth in May exceeded all expectations, underscoring labor-market resilience and increasing market bets that the central bank could raise rates. Goldman Sachs maintained that rate hikes were still unlikely, but raised its estimate of the probability of a modest hike to 20% from 10%. Its baseline outlook continued to expect two 25-basis-point rate cuts next year, while lowering the probability of that scenario to 30% from 40%. The bank also lowered its forecast for the U.S. unemployment rate this year to 4.4% from 4.6%.