Headline: Goldman Sees December Fed Cut, With Further Easing Through Mid-2026
Key Takeaways
Introduction: Goldman Sachs expects the Federal Reserve to deliver another interest rate cut at its December meeting, followed by two additional reductions in March and June 2026. The bank’s outlook cites moderating inflation and a cooler labor market as giving policymakers room to steadily move policy toward neutral.
Goldman’s baseline view is that disinflation is becoming more durable, allowing the Fed to continue a measured easing cycle without reigniting price pressures. Under this trajectory, the federal funds rate would fall toward a 3.00%–3.25% range by mid-2026. While officials are likely to keep a cautious tone in the near term, the firm expects the policy stance to gradually shift away from restrictive settings over the next year.
Financial conditions have already loosened since the Fed began trimming rates, helping to steady corporate borrowing costs and household credit flows. Goldman notes that a persistent, measured easing path typically supports front-end duration, takes some heat out of the US dollar, and bolsters risk assets that benefit from lower real rates. By the middle of 2026, rates would sit below last year’s peak while remaining above the ultra-accommodative levels seen in the prior decade.
For markets and rate-sensitive sectors, the implications are clear: a slower, steadier policy pivot rather than a rapid cutting cycle. If realized, this environment may offer businesses and consumers a more predictable backdrop for financing, investment, and spending decisions as monetary policy normalizes.
Key Points: – Goldman Sachs expects a December rate cut, the third in a row. – Additional Fed cuts are forecast for March and June 2026. – Terminal target seen near 3.00%–3.25% by mid-2026. – Disinflation and a cooler labor market underpin the easing outlook. – Financial conditions have eased, stabilizing borrowing and credit flows. – A measured cycle could temper USD strength and support duration and risk assets.
