Goldman Sachs: Expects the Fed to raise rates by another 0.25% in October.

Goldman Sachs released a research report stating that the Federal Open Market Committee (FOMC) raised the federal funds rate by 25 basis points to 3.75-4%. Although the market widely expected this rate hike, this meeting was more hawkish than the bank had anticipated. It now expects the FOMC to raise rates by another 25 basis points in October, whereas previously it had expected September to be the only rate hike. The bank believes that consecutive rate hikes are the most natural policy choice, as this aligns with what the FOMC described as a "more timely return" to the 2% target. However, further rate hikes beyond that are not its base case, one reason being that the bank's forecast for core personal consumption expenditures inflation remains below the median forecast of FOMC members. The bank forecasts 3.2% and 2.2% for the fourth quarter of this year and the fourth quarter of next year, respectively, while the FOMC median is 3.4% and 2.5%. Goldman Sachs maintains its terminal rate forecast at 3.25-3.5%, which reflects forecasts of 25 basis point rate cuts each in September and December 2027, and March 2028.