Goldman Delays Fed Rate Hike Call to December as October Odds Slip

Goldman Sachs pushed its forecast for the next Federal Reserve rate hike from October to December, citing shifting economic data and bond-market volatility. New York Fed President John Williams said one more hike this year may suffice, adding there is "no rush" after September's move. Williams, a permanent FOMC voter, projected 2026 GDP growth of 2.25%, unemployment at 4% by 2027 and inflation at 3.5% this year before returning to the 2% target by 2028. He flagged rising AI investment as a potential source of additional inflation pressure. Odds of an October hike fell to 40% on Wednesday from 64%, while the 2-year Treasury yield stood at 4.887%. The October FOMC meeting falls less than a week before midterm elections, raising political sensitivity. Since late August, the 10-year Treasury yield has climbed roughly 67 basis points to 5.293%, tightening financial conditions and giving the Fed reason to hold.