Goldman Sachs Shifts Fed Rate Hike Forecast to December

Goldman Sachs shifted its forecast for the next Federal Reserve rate hike from October to December. The adjustment follows comments from New York Fed President John Williams, who suggested that one additional rate hike this year might be sufficient if the economy develops as expected.

Williams indicated there is "no need for urgency" following the September hike, which allows the Federal Open Market Committee more time to review economic data. Consequently, market odds for a rate hike on October 28 have fallen to 40%.

Analysts note that the timing of the October meeting is complicated by its proximity to the November midterm elections, which could trigger political criticism from Donald Trump and Republicans. Furthermore, rising 10-year and 2-year Treasury yields are already tightening financial conditions, providing the Federal Reserve a potential justification to pause in October.