The Federal Reserve unanimously raised the target range for the federal funds rate to 3.75%-4.00% on Sept. 16. Goldman Sachs responded to the move by updating its policy outlook to include another 25 basis point increase in October, adding a second tightening step to the bank's expectations for the remainder of the year. This revised forecast follows the hike the firm had already predicted for September.

The decision by Fed Chair Kevin Warsh ended a borrowing cost pause that had lasted since July 2023. The central bank stated the action would support a timelier return to its 2% inflation target, and a median projection indicated one more increase would occur before the end of 2026.