John Waldron, the chief operating officer of Goldman Sachs, estimates the U.S. Federal Reserve will cut interest rates by the end of 2026 [1].

This projection suggests that the central bank will maintain higher borrowing costs for longer than previously anticipated. Such a delay impacts everything from corporate borrowing and mortgage rates, to global investment strategies.

Waldron said the outlook during an interview on CNBC's "Closing Bell" [1]. He said that the timeline for rate relief has shifted due to specific economic pressures. According to reports, elevated inflation driven by high energy prices and a resilient labor market have pushed back expectations for these cuts [2].

Goldman Sachs research provides varying projections on the exact frequency of these adjustments. One analysis suggests the firm expects three 25-basis-point cuts in 2025, and two additional cuts in 2026 [3]. However, other data indicates a more delayed schedule, with the next two rate cuts projected for December 2026 and March 2027 [4].

The discrepancy in timelines reflects the volatility of inflation markers. The firm's updated outlook specifically points to December 2026 as a key window for the Fed to begin lowering rates [2]. This shift is largely seen as a response to the economic fallout from energy price spikes and the enduring strength of the U.S. workforce [2].

As the Federal Reserve monitors the Consumer Price Index and employment data, the window for policy shifts remains narrow. The firm's current stance suggests that the path to lower rates is longer and more precarious than earlier forecasts predicted [2].

“Goldman Sachs COO John Waldron estimates the U.S. Federal Reserve will cut interest rates by the end of 2026.”

The shift in Goldman Sachs' forecast signals a growing belief among top financial institutions that the 'last mile' of fighting inflation is the hardest. By pushing the expected rate cuts to late 2026 or early 2027, the firm acknowledges that external shocks—such as energy price volatility—and a tight labor market are preventing the Federal Reserve from pivoting to a more accommodative monetary policy.