GS FOMC View The September FOMC Goldmans Take from Traders and Research 15 Sep 2026

GS View - The September FOMC Goldmans Take from Traders and Research 15 Sep 2026 FOMC View · Goldman Sachs · Cross-Asset Franchise Tue 15 Sep 2026, 9:37pm ET

The Fed is expected to deliver a 25bp hike this week—not on strong fundamentals, but because ~90% market pricing makes holding by the Fed too risky given the negative reaction it would trigger. On the trading side, 30y tails have underperformed the move higher in rate vols and could offer cheaper convexity relative to the rest of the rate vol surface. In a dovish hike, we like USD shorts vs. JPY and AUD. We also like downside puts in oil on a Hormuz/Saudi de-escalation, and like owning wingy GLD calls into the event.

Views from GS US Economics Research Team

We added a 25bp rate hike at this week’s September FOMC meeting to our forecast last Friday following the August CPI report. The report had little impact on our inflation view but pushed market pricing of a hike to nearly 90%, high enough that the FOMC will likely want to avoid the market reaction that would likely follow from remaining on hold. We expect the FOMC to make only the minimum necessary change to its statement, which will likely note that it is hiking to return inflation to 2% but will likely avoid providing guidance on the path forward or the criteria for further hikes. We expect Governor Waller to dissent because the latest inflation numbers have been below the threshold for a hold he set in a recent appearance.

The key question for the meeting is whether the median dot will show one hike or two in 2026. We expect a 10-8 majority to show one hike because some participants might be ambivalent about the first hike and some might want to avoid pushing market expectations any higher. But we see a risk of a majority for two hikes if more participants than we expect see a hike this week as a normal response to higher oil prices and AI demand and the start of a series of rate hikes. We suspect that a majority of FOMC participants would prefer not to hike again at the October meeting, either because it comes just before the midterms, because there is only one more month of inflation data before the meeting, or because participants who are skeptical of the case for hiking would likely prefer that it at least be limited to a more gradual pace. By December, we think that further evidence of improvement in the inflation trend and greater distance from some of the key drivers of higher inflation, especially tariffs and the Iran war, will make another hike seem unnecessary.

We continue to expect two cuts in 2027 but now expect them in September and December (vs. June and December previously). We have also raised our forecast for the terminal rate to 3.25-3.5% (vs. 3-3.25% previously). We expect the 2027 and 2028 medians to show one cut each, remaining at 3.625% and 3.375%. The means are likely to rise a bit in both cases. While the great majority of participants will likely

show at least one cut in 2027, it is possible that the 2027 median will be higher than 3.625% because participants projecting different numbers of hikes this year will envision cuts starting from different levels. Finally, we expect the neutral rate estimate to creep a bit higher at this meeting on a mean basis and probably on a median basis. We expect it to continue rising gradually over the next year to about 3.25- 3.5%, in part because the longer the economy performs well at higher interest rates, the more likely FOMC participants are to conclude that we might already be near neutral, and in part because some FOMC participants might conclude that AI investment demand is raising the equilibrium interest rate.

Full FOMC Preview Piece from GIR available on Marquee.