Goldman shifts forecast for next Fed hike to December

Goldman Sachs has pushed its forecast for the Federal Reserve’s next interest-rate increase from October to December, saying there is a strong chance policymakers may decide that no further hikes are needed. The change reflects the bank’s outlook, not a decision by the Fed, which has not settled whether to raise rates again. Goldman had expected a quarter-point increase at the Fed’s October meeting. It revised that call after August inflation data came in below economists’ expectations and New York Fed President John Williams said policymakers had time to assess incoming information before acting. The personal consumption expenditures price index, the Fed’s preferred inflation gauge, rose 3.4% from a year earlier in August, compared with the 3.7% increase economists had forecast. Core PCE inflation, which excludes food and energy, also came in below expectations, at about 3% annually. Goldman forecasts core PCE inflation of 3% in the fourth quarter, below the 3.4% median projection among Fed participants. Market pricing shifted after the inflation release.