Goldman Sachs chief economist Jan Hatzius expects the Federal Reserve to deliver one more quarter-point rate increase in December, although continued cooling in inflation could eliminate that move. The forecast comes less than two weeks after the central bank lifted its benchmark range to 3.75%-4.00% in an effort to return inflation toward 2%. Weaker employment data, softer monthly inflation and already-tight financial conditions have undermined the case for further aggressive tightening. Employers added 29,000 jobs in September, well below the roughly 90,000 expected, while unemployment rose to 4.2% and average hourly earnings increased 0.1%. August core PCE (a measure of underlying consumer inflation) rose 0.2% from the previous month, although headline PCE was up 3.4% from a year earlier. Hatzius said markets were still pricing in too much tightening and that another soft inflation reading could lead the Fed to skip both an October and December increase. Markets have shifted from pricing an October hike at above 70% to about 13.8% after the jobs report, leaving an October pause followed by a December move as the prevailing expectation. Goldman’s view is less aggressive than forecasts from some major banks, including Morgan Stanley, which sees hikes in December 2026 and March 2027, and an earlier Bank of America forecast for October and December increases. Even if the Fed stops raising rates, mortgage and other long-term borrowing costs may not fall quickly because they are more closely linked to longer-term bond yields, which could remain high amid Treasury supply and other pressures.