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[Goldman Sachs Shifts Stance: Expects Another 25 Basis Point Rate Hike by the Fed in October, and Two More Rate Hikes in 2026] (1) Goldman Sachs now expects the Fed to raise interest rates by another 25 basis points in October, becoming one of the first major Wall Street investment banks to predict consecutive rate hikes after the Fed released hawkish signals on Wednesday. This reverses Goldman Sachs' previous view that the Fed had completed its tightening cycle after raising rates in September. (2) Goldman Sachs said that the Fed's latest interest rate forecasts show that the vast majority of policymakers expect at least one more rate hike this year, indicating that the "baseline expectation" for 2026 is two rate hikes. The brokerage said that October is the most likely time to take the next step, as policymakers will position further tightening of monetary policy to support a "more timely return" to the Fed's 2% inflation target. (3) The Fed raised interest rates by 25 basis points earlier on Wednesday to a range of 3.75%-4.00%. Goldman Sachs said the meeting was more hawkish than expected, citing factors including policymakers' interest rate forecasts, an increase in the neutral rate, and Chairman Warsh's repeated descriptions of the rate hike as merely "withdrawing a dose of easing." (4) According to the CME Group's FedWatch tool, traders expect a roughly 50% probability of another 25 basis point rate hike by the Fed in October; this probability rose sharply after policymakers hinted that further tightening might be necessary. (5) After Goldman Sachs adjusted its forecasts, Bank of America Global Research became the only major brokerage firm to expect a more aggressive tightening path, predicting rate hikes in October and December. (6) The market will also be watching the Bank of England's policy decision later that day, as well as the Bank of Japan's policy decision on Friday, for further clues about the global interest rate outlook.