What's Top of Mind in Macro Research A hawkish Fed meeting, China's economic and corporate prospects

Economics Research 17 September 2026 | 4:00PM EDT

What’s Top of Mind in Macro Research: A hawkish Fed meeting, China’s economic and corporate prospects

This week: Jenny Grimberg | n A hawkish Fed meeting Goldman Sachs & Co. LLC

Allison Nathan n China’s economic and corporate prospects | Goldman Sachs & Co. LLC

Ashley Rhodes Transcript | Goldman Sachs & Co. LLC

A hawkish Fed meeting The Fed delivered a widely anticipated rate hike at yesterday’s meeting, though the meeting was more hawkish than we expected, and we now forecast that the Fed will hike again in October. While we view additional hikes as possible, we ultimately don’t expect them, partly as our 2026/2027 core PCE inflation forecasts remain below those of the median FOMC participant (3.2%/2.2% vs. 3.4%/2.5%, Q4/Q4).

Like the Fed, the ECB hiked rates at its September meeting, and we continue to expect it to do so again in December and see a low hurdle for an additional hike if Euro area growth remains resilient and inflation pressures persist. We think the energy price surge points toward lower growth and higher inflation over the coming months, leading us to recently slightly lower our 4Q26/1Q27 growth forecasts (to 0.15%/0.20% from 0.19%/0.28%) and raise our peak core/headline inflation forecasts (to 2.7%/3.8% from 2.6%/3.6%).

We similarly expect the BoJ to deliver a rate hike at this week’s meeting, though we don’t view an acceleration in the pace of hikes as likely and maintain that the BoJ will next raise rates in January 2027. But we will be closely watching how inflation evolves as well as whether Governor Ueda opens the door to faster rate hikes at the upcoming press conference, which would likely fuel renewed Yen strength vs. the Dollar.

By contrast, the BoE kept rates on hold at today’s meeting, though several policymakers signaled openness to raising Bank Rate if inflationary risks continue to build, and we continue to expect a rate hike at the November meeting given that current energy price pressures are likely to persist.

The hawkishness across many major central banks continues to support global bond yields, and we recently raised our YE26 10y Bund and Gilt yield forecasts to 3.25% and 5.00% (from 3.00% and 4.40%) and see the risks to our 4.75% YE26 10y Treasury yield forecast as skewed to the upside. We maintain that sustainable rate

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Goldman Sachs What’s Top of Mind in Macro Research

relief will require a change in the fundamental outlook. In this higher cost of capital environment, while the strategic case for more “normal” bond allocations has strengthened, we see a mixed tactical case for higher bond allocations in multi-asset portfolios and are closely watching for any slowdown in corporate profit growth that could put downward pressure on equity prices.

A hawkish set of dots at the September FOMC meeting shows a two-hike baseline for 2026 Fed funds rate path implied by the median dots, %

4.875 September FOMC June FOMC * Longer Run *Projections for 2029 were introduced in the September SEP.

Source: Goldman Sachs Global Investment Research.

What else is on our radar? n We’re focused on the fortunes of China’s economy and companies. China’s economy continues to face headwinds from weak domestic demand, as evidenced most recently by weaker-than-expected activity data that led us to lower our 2026 real GDP forecast to 4.5% (from 4.6%, yoy). But we continue to see several bright spots in the economy, including the global expansion of Chinese companies. Indeed, our equity analysts find that Chinese firms have become much larger players in ex-China markets and expect the market share of these firms to rise further over the coming decade, though the rate of expansion will likely slow as Chinese firms move upmarket to challenge global incumbents in their core market segments.

A hawkish Fed meeting: BoE (9/17/2026); Euro area (9/17/2026); European Daily (9/17/2026); Global Strategy Views (9/17/2026); GOAL Post (9/17/2026); US Daily (9/16/2026); USA (9/16/2026); Oil Tracker…