Goldman Sachs economists said stronger-than-expected U.S. labor market means they no longer expect the Fed to cut rates this year. The bank pushed back its timing for the Fed’s final two cuts from Dec 2026 and Mar 2027 to Jun 2027 and Dec 2027. Chief U.S. economist David Mericle said inflation “seems unlikely to become self-sustaining,” keeping the odds of further Fed hikes low. May U.S. job gains beat forecasts, reinforcing market bets on additional tightening; Goldman raised the probability of

Goldman Sachs economists said stronger-than-expected U.S. labor market means they no longer expect the Fed to cut rates this year. The bank pushed back its timing for the Fed’s final two cuts from Dec 2026 and Mar 2027 to Jun 2027 and Dec 2027. Chief U.S. economist David Mericle said inflation “seems unlikely to become self-sustaining,” keeping the odds of further Fed hikes low. May U.S. job gains beat forecasts, reinforcing market bets on additional tightening; Goldman raised the probability of a small hike this year from 10% to 20%. Its baseline still assumes two 25bp cuts next year, but the chance of that scenario was lowered from 40% to 30%. Goldman also revised down its U.S. unemployment forecast for this year to 4.4% from 4.6%.