Goldman Sachs has flipped its forecast on the Federal Reserve’s next interest rate move. The bank now expects the central bank to raise rates again in October, a 180-degree pivot from its earlier call for a September hike followed by a pause.
The change comes after the Fed on Wednesday lifted its benchmark rate by 25 basis points to a 3.75%–4.00% target range. Chair Kevin Warsh struck a hawkish tone at the post-meeting press conference, saying inflation remains “too high” and that the latest hike merely removed a “dose of accommodation.” That implies policy is still not restrictive enough and more rate hikes may be in the pipeline.
Traders are pricing just over 50% chance of another 25 basis points hike in October, according to the CME’s FedWatch tool. Bitcoin continues to trade near $76,260, up just 0.5% on a 24 hour basis.
Goldman’s Reversal
Goldman Sachs changed its mind directly. The bank previously expected a September hike followed by a pause. Now it expects a hike in October.
The shift follows the Fed’s own projections. A strong majority of policymakers expect at least one more increase this year. The updated rate projections revealed that consensus.
Warsh’s comments at the press conference pushed the needle. He said inflation remains “too high” and that the latest hike merely removed a “dose of accommodation,” implying policy is still not restrictive enough and more rate hikes may be in the pipeline.
What Warsh Said
Warsh’s remarks were the catalyst for Goldman’s pivot. He said inflation remains “too high” and that the latest hike merely removed a “dose of accommodation.”
That phrasing matters. A “dose of accommodation” means the Fed’s previous easing was reduced, but it also suggests policy is still not restrictive enough. More hikes could follow.
The combination of the rate projection data and Warsh’s tone convinced Goldman to change its mind.
The Traders’ Position
Traders are pricing just over 50% chance of another 25 basis points hike in October. That figure reflects the market’s uncertainty about the Fed’s next move.
Goldman’s forecast is now on the table. The bank’s prior position was a September hike followed by a pause. Its new position is a hike in October.
| Forecast | Date | Basis |
|---|---|---|
| Goldman’s prior call | September | September hike followed by a pause |
| Goldman’s new call | October | Rate hike in October |
| Traders | October | Just over 50% chance |
The Bitcoin Context
Bitcoin is trading near $76,260, up just 0.5% on a 24 hour basis. The cryptocurrency has shown mixed performance since the Fed’s decision.
The price action is modest. A 0.5% gain over a 24 hour period is a small move.
Why Goldman Changed
Goldman’s pivot is notable because it is a direct reversal. The bank moved from September to October, and it did so in response to the Fed’s own data and Warsh’s public comments.
The move shows how quickly banks can adjust their forecasts when new information arrives. Goldman saw the updated rate projections and heard Warsh’s hawkish tone. It changed its mind accordingly.
What This Means for Investors
The forecast shift matters for anyone holding dollar-denominated assets. A higher rate environment changes the cost of borrowing and the return on savings.
For bitcoin investors, the picture is murkier. The cryptocurrency’s performance has been mixed since the Fed’s decision.
The 50% chance of another hike in October is a warning sign. Traders are not pricing in certainty, and the market is split.
The Bottom Line
Goldman’s pivot is a signal that the Fed’s tightening cycle may continue. The bank sees one more hike coming in October, and its reasoning rests on the Fed’s own data and Warsh’s public comments.
The market is split on whether that happens. Traders are pricing just over 50% chance, which is a narrow margin.
The forecast is not a guarantee. It is a prediction based on current information. The Fed has not announced its next move, and nothing is final until it does.
The story is simple: Goldman changed its mind. The reasons were clear. The market is waiting to see which way the Fed goes.
The next meeting will settle this. Until then, the forecast stands as a reminder that even the biggest banks can flip their positions when the facts change.
Here is the order of events leading to Goldman’s pivot:
- The Fed raised its benchmark rate by 25 basis points to a 3.75%–4.00% target range on Wednesday.
- Chair Kevin Warsh said inflation remains “too high” and that the latest hike merely removed a “dose of accommodation.”
- Goldman Sachs revised its forecast from a September hike followed by a pause to a hike in October.
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