Goldman Sachs Asset Management: Fed Unlikely to Enter Sustained Rate-Hike Cycle

The gap between the Fed's dot plot and market pricing is the real story here: the dot plot signals one more hike, while money markets are pricing a cumulative 37 basis points across the two remaining meetings, meaning markets are leaning toward more tightening than the Fed's own guidance implies. Goldman's pushback rests on the view that tariff- and energy-driven inflation will fade and the economy is not overheating, which puts it at odds with that market pricing. Whether inflation expectations stay anchored is the open question, since that assumption underpins the whole call.