Goldman Sachs delays Fed rate-cut call, sees rates on hold through 2026

A longer stretch of high rates is now Goldman Sachs’ base case, and that changes the internal math for bankers, traders and dealmakers who had been counting on cheaper money to revive activity. After a strong May jobs report, Goldman pushed its next Fed cut call out again and said rates could stay unchanged through 2026, with easing delayed until 2027.

That is a sharp turn from Goldman Sachs Research’s December 3, 2025 outlook, which had expected the Federal Reserve to cut in December 2025, pause in January, then cut again in March and June 2026. That earlier call would have taken the federal funds rate to 3.0% to 3.25%. Goldman’s Macro Outlook 2026 still projected 2.6% U.S. GDP growth and a 50 basis point cut, but the newer read is that stronger economic activity, firmer job growth and persistent inflation are keeping the Fed on the sidelines.

The data have backed up that caution. The Federal Reserve held its target range at 3.50% to 3.75% on April 29, 2026, and the U.S. Bureau of Labor Statistics reported that nonfarm payrolls rose by 172,000 in May while unemployment stayed at 4.3%. Goldman’s earlier inflation view also assumed only gradual relief, with core PCE at 2.8% in September and trending toward about 2% later in 2026. Recent June commentary has been even less forgiving, with some reports saying Goldman now expects PCE inflation to hover near 3% through the year.

Inside Goldman, that means the businesses most dependent on a cleaner financing backdrop may stay under pressure longer. Investment banking teams that live on refinancing, leveraged finance and rate-sensitive M&A are less likely to get a broad rebound from falling borrowing costs, which can keep fee pools tight and hiring selective. Analysts and associates in those groups may still see long hours and heavy execution demands, but with less help from a cyclical pickup in deal flow.

The relative winners are more likely to be on the markets side. Rates traders, macro desks and sales teams can keep making money off client hedging and positioning in a world where policy stays pinned and the timing of cuts keeps moving. But even there, the upside is different from a true easing cycle. A hold-through-2026 market may support activity, yet it also leaves Goldman’s annual compensation reset tied more to market share, discipline and execution than to a rate-cut tailwind that never arrived.