Goldman Sachs expects the FOMC to keep rates unchanged this year despite rising odds of a December hike in futures markets.
Goldman Sachs said its base case remains that the Federal Reserve will leave its policy rate unchanged through 2025, even as futures traders price in a 60% chance of a 25 basis point hike by year-end. The June FOMC meeting, which kept rates at 3.50%-3.75%, offered no forward guidance, leaving markets to debate the timing of the next move.
The Fed had previously cut rates by 25 basis points in its last three meetings of 2025 to support a softening labor market, but paused after inflation risks outweighed job stabilization concerns. The CME Group FedWatch Tool now points to December as the most likely meeting for a potential hike.
Markets remain divided, with policymakers signaling potential support for a hike depending on upcoming inflation and jobs data.