The Federal Reserve increased its benchmark interest rate by 25 basis points on Wednesday, lifting the target range to 3.75%–4.00%. The move marked the central bank’s first rate increase since July 2023 and came as inflation remained above the 2% goal while economic activity stayed solid.

Fed Chair Kevin Warsh described the decision in hawkish terms, stating that inflation remains too high and that the hike merely removed a dose of accommodation. Updated projections from policymakers showed a clear majority expecting further tightening before year-end.

Goldman Sachs Revises Outlook for Consecutive Increases

Goldman Sachs has shifted its forecast and now anticipates another 25 basis point rise at the October meeting. The bank previously expected the September action to stand as the only increase of the year.

Analysts at the firm pointed to the Fed’s updated rate projections, an upward revision in the estimated neutral rate, and Warsh’s repeated comments framing policy as still accommodative. They identified October as the most probable timing for the next move, citing the desire among officials for a quicker return of inflation to the 2% target.

Market pricing has moved closer to this view. Traders assign roughly a 50% to 53% probability of a 25 basis point hike in October, according to CME FedWatch data.

Citi Sees Pause and Later Easing Path

Citigroup takes a different stance. The bank expects the Fed to leave rates unchanged at both the October and December meetings. It characterizes the September increase as an adjustment rather than the start of a prolonged tightening cycle.

Citi projects that if inflation data continue to ease, the first 25 basis point cut could arrive in June 2027, followed by additional reductions in September and December of that year. The outlook rests on the assumption that price pressures will keep moderating while the central bank maintains a restrictive stance in the near term.

Policy Signals and Market Response

The Fed’s latest projections indicated that 16 of the officials who submitted forecasts anticipate at least one more rate increase in 2026, with a smaller number looking for two additional moves. Longer-run estimates for the federal funds rate were also revised higher.

Bitcoin traded near $76,260, showing a modest gain of about 0.5% over the prior 24 hours as markets digested the central bank’s decision and the subsequent shifts in bank forecasts.

Other institutions have also adjusted their views. Bank of America maintains a more aggressive path that includes potential increases in both October and December, placing it among the more hawkish forecasts on Wall Street.

The divergence between Goldman Sachs and Citigroup illustrates the range of interpretations following the September meeting. Officials have signaled readiness to act further if needed to restore price stability, while some private-sector economists continue to look for eventual easing once clearer progress on inflation becomes evident.