• Goldman Sachs (GS) Asset Management forecasts a December rate hike after the Fed held rates at 3.75%–4.00% on Wednesday.
  • Fixed-income CIO Kay Haigh cites stronger-than-expected September inflation and warns of further tightening in 2027 if energy prices or economic data stay hot.
  • The Fed’s decision revealed internal disagreement, with two officials preferring an immediate quarter-point increase.

A Pause, Not an End

The Federal Reserve’s decision to keep its benchmark rate unchanged at 3.75%–4.00% on Wednesday is being read by Goldman Sachs Asset Management as a brief pause rather than the end of its tightening cycle. The firm expects the central bank to resume raising rates in December, according to Kay Haigh, Goldman’s fixed-income chief investment officer.

Haigh pointed to stronger-than-expected September inflation as evidence that price pressures remain stubbornly elevated. She also cautioned that further increases in energy prices or stronger economic data could prompt additional monetary tightening in 2027. The forecast underscores the central question facing policymakers: whether higher energy costs and resilient demand will keep inflation elevated long enough to require further action next year.

The Fed’s post-meeting statement acknowledged that inflation remains elevated and said additional information will help determine the appropriate policy stance. The hold followed a quarter-percentage-point increase in September.

Dissent Within the Ranks

The decision was not unanimous. Governor Lisa Cook and Cleveland Fed President Beth Hammack preferred an immediate quarter-point increase, according to people familiar with the matter, signaling that some officials see little reason to wait. Their dissent highlights the delicate balance the Fed is trying to strike between taming inflation and avoiding unnecessary damage to employment and growth.

September consumer-price inflation reached 3.7% year over year, with energy a major contributor. The Fed’s September minutes identified three interacting sources of pressure: higher energy and input costs tied to geopolitical developments, the lingering effects of earlier tariff increases, and strong AI-related investment that has boosted demand for technology goods, infrastructure, and financing.

Policymakers are concerned that a prolonged energy shock could spread into transportation costs, other prices, and inflation expectations. Markets have already adjusted: the September minutes recorded roughly 35-basis-point increases in Treasury yields across the two- to ten-year segment over the preceding intermeeting period. Yet equities rose and corporate credit spreads remained narrow, suggesting financial conditions were not uniformly restrictive.

December in Focus

The next policy meeting is scheduled for December 8–9, and investors increasingly expect another hike then. A quarter-point increase would move the target range to 4.00%–4.25%. But a December move remains a forecast, not a commitment.

Goldman’s view is not universally shared. Some analysts argue that easing energy pressures and softer underlying inflation could reduce the need for additional increases. Goldman itself expects inflation pressures from tariffs, energy, and the AI buildout to ease next year, according to Haigh, but the firm still sees a near-term hike as likely.

The political backdrop adds another layer of complexity. Reporting on September’s hike described President Donald Trump pressing for cuts while Fed Chair Kevin Warsh emphasized persistent inflation. That tension frames the debate around near-term economic relief versus restoring price stability.

Beyond the U.S.

The inflation challenge is not confined to the United States. The September minutes noted that the European Central Bank also raised its policy rate amid inflation pressures associated with the Middle East conflict. Other economies face a similar combination of resilient demand and higher imported energy costs.

For households carrying variable-rate debt, the prospect of another hike means continued expensive credit. Homebuyers and small businesses remain particularly exposed, with Fed staff describing mortgage and small-business financing conditions as more restrictive than those facing larger companies. Lower- and moderate-income households face disproportionate pressure from higher energy bills, which reduce purchasing power even before any additional rate increase.

Goldman Sachs, meanwhile, continues to benefit from its diversified business mix. The firm reported third-quarter net revenue of approximately $18.7 billion, earnings per share of $17.01, and a return on equity of 18.7%. Its Asset & Wealth Management division generated roughly $5.1 billion in revenue, up 14% year over year, with record assets under supervision of $4.1 trillion. Management and other fees increased 22% to $3.6 billion, strengthening the firm’s more stable fee-based businesses.

As the December meeting approaches, all eyes will be on incoming data—particularly energy prices and demand indicators—for clues on whether the Fed will indeed pull the trigger again.

Correction: October 29, 2026: An earlier version of this article misstated the timing of the Fed’s next policy meeting. It is scheduled for December 8–9, not December 15–16.