Goldman Pushes Fed Rate Cuts to 2027 – Here's the New Timeline

Goldman Sachs pushed back its forecast for the next two Federal Reserve rate cuts. The bank now expects the Fed to lower rates in June 2027 and December 2027. That replaces an earlier call for cuts in December 2026 and March 2027.

The revision follows stronger-than-expected U.S. economic data. The labor market stayed resilient. Consumer spending held up. Goldman said recent employment figures reduced the pressure on policymakers to cut rates soon. The firm expects the unemployment rate to rise only modestly, reaching about 4.4% by year-end. That level, Goldman argued, is too low to justify an accelerated easing cycle.

Inflation remains a sticking point. Goldman sees core inflation staying above 3% through 2026 before gradually moving toward the Fed's 2% target in 2027. Several forces are keeping prices elevated: tariffs, higher energy costs, and geopolitical tensions in the Middle East. Continued investment tied to artificial intelligence infrastructure also adds to demand-side pressure, the report noted.

The Federal Open Market Committee will stay cautious until inflation shows more sustained progress, Goldman said. Under the updated forecast, the federal funds rate would eventually decline to a range of 3.0% to 3.25% after the 2027 cuts.

For markets, the extended timeline means the dollar could stay stronger for longer, weighing on gold and emerging-market currencies. The gold profile is sensitive to real yields, which remain elevated with rates on hold. Goldman's own stock, GS, trades in the financials sector where higher-for-longer rates can support net interest margins but delay loan growth.

The next scheduled FOMC meeting is in May. No rate change is priced in. Goldman's economists now see the terminal rate settling at 3.0% to 3.25% after the 2027 cuts.