Goldman Sachs pushes rate hike expectation to December

Goldman Sachs has adjusted its forecast for Federal Reserve rate hikes following a decline in core PCE price index growth. The investment bank now anticipates a 3.0% increase in core PCE year-over-year for the fourth quarter of 2024, which is below the median forecast from Federal Open Market Committee participants. This downgrade is attributed to methodological changes and a substantial revision to the portfolio management component.

Goldman Sachs now perceives an October rate increase as improbable, instead scheduling the second rate hike for December. The firm believes there is a high likelihood that the Federal Open Market Committee will eventually determine that additional rate hikes are unnecessary. Real GDP experienced a revision upward by 0.7 percentage points to 2.2% on a quarter-over-quarter basis in the third quarter of 2024, primarily due to higher revisions in consumption and investment.

The national accounts showed a 0.4 percentage point increase in real GDP growth for the first quarter of 2026. The savings rate was significantly revised upwards to 4.1% in August. The goods trade deficit expanded beyond expectations in August, with Goldman Sachs lowering its Q3 GDP growth estimate by 0.1 percentage points to 3.3% on a quarter-over-quarter basis.