Goldman Sachs: Fed to Raise Rates Twice Before Concluding Cycle, Inflation Falling Faster Than Expected

TechFlow reports, according to Chaoxiang Research, that Goldman Sachs' September 22, 2026 research report indicates the Federal Reserve will raise interest rates by 25 basis points in September, with 16 of its 18 committee members projecting at least one additional rate hike within the year. Goldman Sachs anticipates the second rate hike will take place at the October 27–28 meeting. The firm forecasts the federal funds rate will drop to 3.25%–3.5% by the end of 2027, compared to market pricing of 4.3%–4.6%. Core PCE annualized growth has decelerated to 2.5% over the past three months, and Goldman Sachs expects it to fall to 2.2% year-on-year by the end of 2027.

Goldman Sachs notes that core inflation is declining faster than the committee's forecasts, suggesting this tightening cycle is nearing its conclusion. The European Central Bank is expected to raise rates to 2.75% in December, and the Bank of England to 4% in November. S&P 500 earnings per share are projected to grow 36% in 2026, moderating to 11% in 2027. AI-related corporate bond issuance is estimated to reach $420 billion in 2027. Goldman Sachs remains bullish on gold and long refined-oil positions for 2027, while highlighting substantial appreciation potential for the Renminbi.