Goldman Sachs Sees One More 2026 Fed Hike, Tied to Oil Drop

Yahoo Finance·23 Sep 2026·

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Summary · why it matters

Goldman Sachs expects one more interest rate hike for 2026 at the Fed's Oct. 27 meeting, after which the central bank could be done for this cycle, but the firm says a sustained pullback in oil prices that cools inflation is key to that two-and-done approach. Goldman predicts Brent crude oil will drop to $85 per barrel by December. Chief economist Jan Hatzius wrote in a new note that there is little precedent in modern FOMC history for skipping meetings before elections, noting the committee hiked by 75bp six days before the 2022 midterms, and that beyond October the firm sees a stable funds rate as core PCE inflation comes down faster than the committee projects, with rate cuts to a neutral rate estimate of 3.25-3.5% starting in late 2027. The oil call looks correct at least for this week: Brent crude has plummeted nearly 13% from its recent peak of $113 per barrel, breaking back below the key $100 psychological barrier to trade around $98.44, after Saudi Arabia's partial restart of its East-West Pipeline and US-Iran diplomatic dialogue at the United Nations General Assembly helped unwind the geopolitical risk premium. FedWatch Advisors founder Ben Emons said a renaissance in risk is unfolding, sparked by two forces suddenly snapping into alignment, pointing to Meta's release of free AI agents and the IRGC's signal that it may open the Strait within seven days.

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