Goldman Sachs Adds a Third U.S. Rate Hike in March 2027
Key Facts
Goldman Sachs added a third 25-basis-point U.S. rate increase to its March 2027 forecast, lifting the expected peak range for the federal funds rate to 4.25%-4.5%. David Mericle, the bank’s chief U.S. economist, said in a report published by Reuters on 10 November: "We are adding a third 25-basis-point hike to our forecast in March 2027, which would lift the federal funds rate to a peak of between 4.25% and 4.5%." The revision comes as U.S. price pressures persist, after core inflation exceeded market expectations in October. The Fed kept its target range at 3.75%-4.00% on 28 October, with two members voting in favor of raising it. The bank’s forecast points to a more hawkish path, with three expected hikes instead of two.
The U.S. consumer price index rose 0.4% in October from the previous month, following a 0.6% increase in September, according to official data cited by Reuters. Economists surveyed by the news agency had expected a 0.3% monthly increase in October. The core index, which excludes food and energy, rose 0.3% for the month, exceeding the 0.2% consensus. Bureau of Labor Statistics data showed that the 0.3% monthly core increase was repeated in August, September and October. The energy index rose 0.7% in October, following a 5.2% jump in September, while the food index increased 0.5% during the month.
Federal funds futures reflected a repricing of monetary policy expectations after the inflation data, with a quarter-point move nearly fully priced in, according to a Reuters report. The market put the probability of a larger 50-basis-point increase at 10%. Futures were also pricing in three quarter-point hikes by the middle of the following year. Those bets are consistent with Goldman Sachs’ forecast of an additional hike in March, but reflect investors’ pricing of the rate path and do not represent a decision by the Fed. The bank had raised rates by a quarter point on 16 September, to a range of 3.75%-4.00%, in a unanimous vote. It then held the range at its October meeting, with 10 members voting in favor of the decision and two supporting a hike.
Two-year Treasury yields rose 18.44 basis points on 10 November to 4.731%, their biggest daily jump since the tariff turmoil in April 2025. The move in bonds coincided with a decline in U.S. stocks: the S&P 500 fell 0.38% to 7,520.93 points, and the Nasdaq Composite dropped 0.74% to 25,065.87 points. Spot gold also fell 2.62% to $4,030.56 an ounce. By contrast, the dollar index rose 0.56% to 102.25. The moves came in the same session in which price data pushed market expectations toward a higher rate path.
Goldman Sachs shares, trading under the ticker GS, closed at $910.19 on 10 November, according to EL7 daily data. The Fed had raised its target range in September to 3.75%-4.00%, before holding it in October. Goldman’s new forecast puts the federal funds rate peak at 4.25%-4.5% following the assumed increase in March 2027. The next U.S. data release listed in the official schedule is the October Producer Price Index. The Bureau of Labor Statistics scheduled its release for 13 November 2026 at 08:30 a.m.