Goldman Sachs: Fed to deliver final 2026 rate hike in October if oil falls
Goldman Sachs forecasts the Federal Reserve will deliver its final interest rate hike of the current cycle at the October 27, 2026 FOMC meeting, potentially ending the tightening phase. The investment bank cautions that sustained declines in oil prices to curb inflation are a critical condition for this scenario. Goldman Sachs expects Brent crude to fall to $85 per barrel by December. Several Fed officials have signaled support for further tightening due to persistent inflation.
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Cross-source coverage
Common ground
- The Fed's monetary policy is deeply entangled with oil prices and geopolitical events, making it less independent than it claims.
- Goldman Sachs' forecast tying the end of rate hikes to falling oil prices was fragile and quickly became obsolete.
- The human impact of Fed decisions falls hardest on the Global South, where currency crashes and food price spikes are common.
- There is a lack of democratic accountability in global monetary policy, as billions of people affected have no say in decisions.
- The current system is structurally vulnerable to oil shocks and geopolitical whims, regardless of the accuracy of any single forecast.
Points of contention
- Whether the Fed's entanglement with geopolitics is a normal feature of reserve currency status or a sign of systemic failure.
- Whether the BRICS multipolar alternative is a viable solution or just another top-down system with different elites.
- Whether the Global South is a passive victim of Western policies or has agency through its own government choices like dollar pegs.
- Whether Goldman's bad forecast was just a technical error or evidence of a deeper power imbalance in global finance.
- Whether the Fed's pause was driven by political fear of an election year or by genuine data on oil prices.
Blind spots
- The debate largely ignored the voices of ordinary people in the region—fishermen, farmers, workers—who live with these policy consequences daily.
- There was little discussion of how local elites in the Global South share responsibility for economic vulnerabilities like import dependency.
- The possibility of reforming the current system from within, rather than replacing it entirely, was not seriously explored.
- The role of non-oil factors like services inflation and wage growth in driving Fed policy was mentioned but not deeply analyzed.
- The fact that the entire debate was conducted in English using Western financial terms itself reflects the power imbalance being criticized.
WorldAttention’s read
This roundtable revealed a deep divide over whether the Fed's vulnerability to oil geopolitics is a normal feature of global finance or a crisis of legitimacy. While all agreed that the system is fragile and hurts the Global South disproportionately, they disagreed on solutions: the Western Agent called for democratic accountability within the current order, the Eastern Agent pushed for a multipolar BRICS alternative, and the Regional Agent demanded local agency from the ground up. The Neutral Agent pointed out that the forecast driving the debate was already obsolete, but conceded that the underlying structural issues remain real. Ultimately, the conversation exposed a shared blind spot—the absence of the very people most affected by these policies from the discussion itself. The core question left unanswered is whether any system, old or new, can truly serve those who have no seat at the table.
Reporting timeline
Goldman Sachs Expects Fed to Deliver Final 2023 Rate Hike at October 27 Meeting
Goldman Sachs has released a report predicting that the Federal Reserve will complete its final interest rate hike of the year at its October 27 policy meeting, after which the current tightening cycle may end. The investment bank cautioned, however, that a key condition for this 'two-hikes-and-done' scenario is a sustained decline in oil prices to help curb inflation. The forecast, reported by Chinese financial media outlet 财联社 on September 24, reflects market speculation about the Fed's next moves amid ongoing inflationary pressures and energy price volatility.
Read sourceGoldman Sachs Expects Fed to Deliver Final 2023 Rate Hike at October 27 Meeting
Goldman Sachs released a report on September 24 predicting that the Federal Reserve will complete its final interest rate hike of the year at the October 27 policy meeting, potentially ending the current tightening cycle. The investment bank noted that this forecast depends on a key condition: oil prices must continue to decline in order to suppress inflation. The report suggests that if oil prices cooperate, the Fed may only need two more rate hikes—including the one expected in October—to conclude its campaign against inflation. This forecast comes amid ongoing market uncertainty about the Fed's next moves, with energy prices remaining a volatile factor in the inflation outlook.
Read sourceGoldman Sachs Sees Final Fed Rate Hike in October, Tied to Oil Price Drop
Goldman Sachs forecasts that the Federal Reserve will deliver its final interest rate hike of the current cycle at the October 27 Federal Open Market Committee meeting, potentially ending the tightening phase. The investment bank emphasizes that sustained declines in oil prices to curb inflation are a critical condition for this scenario. According to the CME FedWatch Tool, markets broadly expect a 25-basis-point hike this month. Several Fed officials, including Richmond Fed President Tom Barkin, Boston Fed President Susan Collins, and St. Louis Fed President Alberto Musalem, have signaled support for further tightening due to persistent inflation driven by rising oil prices and tariffs. Goldman Sachs predicts Brent crude will fall to $85 per barrel by December, a view supported by recent price drops as oil fell nearly 13% from a high of $113, trading near $98.8, amid eased supply concerns. The bank also expects the Fed to hold rates steady after October and begin a rate-cutting cycle from late 2027, targeting a neutral rate of 3.25%-3.5%.
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Goldman Sachs predicts one more Fed rate hike in October, possibly ending cycle
Goldman Sachs forecasts that the Federal Reserve will deliver its final rate hike of the current cycle at its October 27 meeting, according to a report by 财联社. The investment bank's chief economist Jan Hatzius noted that a sustained decline in oil prices to curb inflation is a key condition for this 'two-hikes-and-done' scenario. The CME FedWatch Tool shows markets broadly expect a 25-basis-point hike this month. Several Fed officials, including Richmond Fed President Tom Barkin and Boston Fed President Susan Collins, have recently signaled support for further tightening. St. Louis Fed President Alberto Musalem also warned that strong demand and commodity price shocks may require additional rate increases. Goldman Sachs expects Brent crude to fall to $85 per barrel by December, a view that gained preliminary support as oil prices dropped nearly 13% from recent highs, partly due to Saudi Arabia restarting a key pipeline and hopes for a reopening of the Strait of Hormuz. The bank forecasts the Fed will hold rates steady after October and begin cutting rates from late 2027 to a neutral level of 3.25%-3.5%.
Read sourceGoldman Sachs Predicts One More Fed Rate Hike in October, Possibly Ending Cycle
Goldman Sachs forecasts the Federal Reserve will raise interest rates by 25 basis points in October, potentially marking the final hike of the current tightening cycle. The prediction hinges on sustained declines in oil prices to curb inflation, with Brent crude expected to fall to $85 per barrel by December. Several Fed officials, including Richmond Fed President Tom Barkin, Boston Fed President Susan Collins, and St. Louis Fed President Alberto Musalem, have signaled support for further rate increases due to persistent inflation driven by high oil prices and tariffs. Goldman Sachs chief economist Jan Hatzius noted that skipping a rate hike before an election has rare precedent, citing the 2022 midterm election when the Fed raised rates by 75 basis points. The bank expects core PCE inflation to fall faster than the Fed anticipates, with rates remaining stable after October and a potential easing cycle beginning in late 2027, targeting a neutral rate of 3.25%-3.5%. Recent oil price declines, partly due to Saudi Arabia restarting a pipeline and geopolitical developments, have reduced risk premiums and supported Goldman's outlook.
Read sourceGoldman Sachs predicts one more Fed rate hike in 2026 if oil prices fall
Goldman Sachs forecasts that the Federal Reserve will implement one more interest rate hike at its October 27, 2026 meeting, after which the current tightening cycle may conclude. However, this prediction depends on a sustained decline in oil prices that cools inflation. Goldman Sachs chief economist Jan Hatzius stated that there is little precedent for the Fed skipping meetings before elections, noting the 75 basis point hike six days before the 2022 midterms. The firm expects Brent crude oil to drop to $85 per barrel by December, a view supported by recent market moves. Crude oil futures have fallen sharply over the past week as geopolitical supply fears eased, with Brent crude plummeting nearly 13% from its recent peak of $113 per barrel to around $98.44. The pullback was triggered by Saudi Arabia's partial restart of its East-West Pipeline and diplomatic dialogue between the US and Iran at the United Nations General Assembly. Beyond October, Goldman Sachs sees rate cuts starting in late 2027 to a neutral rate of 3.25-3.5%.