US Federal Reserve Rate Hike Expected in October as Goldman Sachs Reconsiders Policy Path

Goldman Sachs now expects the US Federal Reserve to lift interest rates again. The bank sees a 25-basis-point move as early as October. This follows the Fed’s latest policy decision and updated projections. The change matters because many investors had assumed the recent increase ended the cycle.

The Federal Reserve raised its benchmark rate by 25 basis points on Wednesday. The target range moved to 3.75%-4%. It was the first rate rise since 2023. Policymakers are still dealing with inflation above the 2% target. Goldman Sachs earlier thought the tightening phase had likely finished.

Goldman Sachs shifted its view after reading the Fed’s latest signals. Updated projections showed most policymakers still expect at least one more rise this year. Goldman Sachs also referenced a stronger stance on inflation. The bank now flags a possible "two-hike baseline" for 2026, based on projections.

Goldman Sachs sees October as the clearest window for another increase. The Fed has indicated more tightening may be needed. The goal is to return inflation to 2% sooner. Mint reported that this guidance influenced Goldman’s timing view. The revision stood out because markets had priced a pause.

Investors also adjusted expectations after the Fed decision. CME Group’s FedWatch tool showed markets pricing about a 50% chance. That implied another quarter-point rise in October. Yet the October meeting sits close to the US midterm elections. This timing added uncertainty to policy expectations.

There is also disagreement inside Goldman-linked views on timing. Goldman Sachs economists lean towards October as the likeliest meeting. However, Goldman Sachs Asset Management executive Kay Haigh has said the Fed could skip October. The reason is the meeting’s proximity to the elections. That split keeps pricing unsettled.

Item	Detail
Fed target range after latest move	3.75%-4%
Latest increase	25 basis points
Implied October hike probability (FedWatch)	~50%

October rate hike impact on India and global markets

Another US rate rise could keep financial conditions tight. It can affect equities, bonds, currencies, and commodities worldwide. For India and other emerging markets, higher US yields may shift capital flows. A stronger dollar can also pressure currency markets. Investors often compare returns against US Treasuries.

Gold may stay sensitive to the Fed’s path. Higher rates can raise the cost of holding non-yielding assets like gold. Still, geopolitical risks and inflation expectations can offset that effect at times. The near-term focus remains whether the Fed acts in October. Goldman Sachs positions for a 25-basis-point rise, while markets remain unsure on timing.