Goldman sees two more Fed hikes, then cuts, as 2027 growth edges up

Goldman Sachs now expects the Federal Reserve to raise rates twice more before reversing course with cuts, while also revising its 2027 growth outlook modestly higher. The mechanism at work is the rate path: additional hikes widen the expected policy-rate differential in favor of the dollar, and the subsequent cut timeline shapes how far forward that support extends, so the USD is most directly exposed through front-end yields and the shape of the futures curve. Goldman Sachs shares are exposed through a different channel, as the bank's equity trades on sensitivity to the rate cycle, the revenue outlook for trading and investment banking, and the broader risk appetite that a firmer growth profile tends to support. Traders should watch the next Fed meeting and accompanying dot plot for whether policymakers' projected terminal rate and cut timing align with Goldman's path, along with the upcoming CPI release, since a hotter print would reinforce the case for further tightening and sharpen the dollar's response.

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