Goldman Sachs is doing something almost no other major Wall Street bank is doing right now: standing firm on its call for Federal Reserve rate cuts in 2026, even as Iran War oil prices push past $109 a barrel and the Fed’s own projections have shifted to just one cut for the year.
The bank’s Chief US Economist, David Mericle, confirmed the view in a note widely covered across financial media: Goldman expects two 25-basis-point cuts, one in September and one in December, bringing the federal funds rate down from its current 3.50%–3.75% to approximately 3.00%–3.25% by year-end. The terminal rate in Goldman’s base case sits at 3%–3.25%.
That call stands in sharp contrast to the Fed’s own March 18 dot plot, what FinancialContent called a “hawkish shock” which signals only one cut for 2026. Goldman is not just predicting cuts, it is predicting more cuts than the Fed is signaling, and more than most of Wall Street believes are coming.
Key Highlight
- Goldman Sachs now expects two Fed rate cuts in 2026, September and December, with the timing pushed back from the original June and September schedule due to the Iran War oil shock.
- Chief US Economist David Mericle: “We’ve pushed back our expectation of Fed cuts to September and December.” The door remains open: “We could be back to the environment with multiple rate cuts for the year if inflation behaves.”
- Bank of America is the key bear case: it has signaled Fed rate hikes are possible if oil stays above $80/barrel, a strong labor market holds, and Powell remains chair.
- Chicago Fed President Austan Goolsbee warned the central bank could actually raise interest rates if inflation rises, adding real risk to Goldman’s cut scenario.
- Bitcoin has historically rallied during Fed easing cycles. A Goldman-style two-cut scenario in H2 2026 would be a meaningful macro tailwind for risk assets, but only if oil and tariff inflation do not derail it.
1. What Goldman Sachs Is Actually Predicting
Understanding Goldman’s forecast requires separating what it has revised from what it is holding firm on.
What changed: Goldman originally called for two 25-basis-point cuts in 2026, the first in June and the second in September. The Iran War oil shock, which pushed Brent crude from roughly $70 per barrel before U.S.-Israel strikes on Iran (February 28) to above $109 at peak, forcing a rethink. The bank pushed back the timing of both cuts, shifting the first from June to September and the second from September to December. This is not capitulation, it is recalibration.
What held: The core thesis, that oil-driven inflation is supply-side and transitory, not structural, and therefore does not warrant a fundamental change to the rate trajectory, remains intact. Goldman’s argument: oil price spikes driven by geopolitical supply disruptions do not have the same persistence as the demand-driven, services-sector inflation the Fed has been fighting since 2022. Once the Strait of Hormuz shock resolves and oil normalize, the underlying inflation path continues downward.
The key condition: David Mericle added crucial optionality, if unemployment rises modestly to around 4.6% alongside slowing inflation, the case for cuts strengthens further. And explicitly: “We could be back to the environment with multiple rate cuts for the year if inflation behaves.” Goldman is not locked into two cuts. It is calibrating dynamically.
Goldman also quantified the oil-inflation relationship precisely: a 10% increase in oil prices pushes headline inflation up by approximately 0.2 percentage points, a key input to its PCE 2.9% end-2026 forecast. Traders, per CME FedWatch, currently assign roughly a 41% probability to a September rate cut. As The Coin Republic reported, Goldman’s two-cut call has sparked optimism at a time when most institutions were pricing in hike risk, making it the most dovish credible call on Wall Street.
How does Federal Reserve policy shape crypto market cycles?Read: How Macro Liquidity Drives Crypto Markets: Rate Cuts, ETFs, and Capital Flows
2. The Oil Problem: Goldman’s Revised Energy Forecast
Goldman’s rate cut forecast did not change in isolation, it came packaged with a major upward revision to the bank’s oil price outlook, published March 22 and led by commodity analyst Daan Struyven.
The bank now expects Brent crude to average $85/barrel in 2026, up from the prior forecast of $77. West Texas Intermediate was raised to $79 from $72. The revision was triggered by what Goldman describes as the largest supply shock in the history of the global crude market: the prolonged closure of the Strait of Hormuz, through which 20% of global oil supply passes.
In the near term, Goldman expects Brent to average around $110/barrel in March and April, roughly 55% above the 2025 average. Longer term, Goldman’s base case still sees oil easing toward $71/barrel by late 2026, which would reduce inflation pressure and re-open the door to faster easing. The base case also assumes flows through the strait stay at just 5% of normal levels for six weeks, followed by a gradual one-month recovery. Under that scenario, cumulative oil losses would exceed 800 million barrels. The risk scenario is more severe: if the disruption extends to two months, Q4 Brent could reach $93/barrel. In extreme scenarios, Goldman warns prices could exceed the 2008 record high.
For 2027, Goldman’s Brent base case stands at $80, not a return to the pre-war world. AsThe Street reported on Goldman’s revised oil forecast, the bank believes structural risk in the Persian Gulf is now permanently repriced.
This creates the central tension in Goldman’s forecast: the bank is simultaneously raising oil prices (inflationary) and predicting rate cuts (disinflationary). How? By arguing the oil shock is temporary and supply-driven, not demand-driven, and by projecting Goldman PCE inflation ends 2026 at around 2.9%, high but falling, giving the Fed just enough room to ease modestly in Q4.
How has the Iran War oil shock impacted Bitcoin and crypto markets?Read: Bitcoin Shows Resilience Amid Iran War, Outshining Gold and Stocks
3. The Bear Case: Bank of America and the Rate Hike Risk
Goldman is the optimist here. Not everyone agrees.
Bank of America has taken the opposite posture, flagging the risk of a Fed rate hike rather than a cut. The bank identified three conditions that would push the Fed to raise rates: oil prices remaining above $80/barrel, the labor market staying strong, and Powell remaining as chair. All three of those conditions are currently met.
Chicago Fed President Austan Goolsbee added weight to the bear case, warning that the central bank could be forced to raise interest rates if inflation continues to rise. His concern: if elevated oil prices begin feeding into services inflation through transportation, logistics, and energy costs, the transitory framing collapses, and the Fed is back in tightening mode.
The Fed’s own dot plot from March 18 signals one cut for 2026, with seven of 19 FOMC members expecting no cuts at all. Markets, per CME FedWatch, are now pricing in a 60% probability of no cut through July 2026, up sharply from 22% before the Powell press conference. AsCoinGape reported on the Goldman vs Bank of America split, Goldman’s two-cut call currently represents the most dovish credible position on Wall Street, with the consensus continuing to drift in the hawkish direction.
For crypto investors, Bank of America’s hike scenario is the tail risk that matters most. A rate hike in the current environment would be the most damaging possible outcome for risk assets, removing the already-delayed cut thesis entirely and potentially triggering a fresh wave of deleveraging.
What happened to Bitcoin when the Fed held rates at March’s FOMC meeting?Read: Bitcoin and Ethereum Drop as Fed Holds Interest Rates Steady
4. What Powell Said and Why It Matters
Fed Chair Jerome Powell’s March 18 press conference is the essential context for understanding why Goldman’s call is now a minority position.
Powell made three statements that defined the post-FOMC market environment:
On oil and inflation:“The net of the oil shock will still be some downward pressure on spending and employment and upward pressure on inflation.” This is the stagflation framing without using the word, Powell acknowledged both sides of the oil shock’s damage simultaneously.
On progress:“The forecast is that we will be making progress on inflation, not as much as we had hoped, but some progress on inflation.” Then crucially: “If we don’t see that progress, then you won’t see the rate cut.”
On oil supply offset: Powell noted that because the U.S. is a net energy exporter, higher oil prices benefit domestic oil companies and could stimulate drilling, a partial offset to the inflationary shock. “Our oil companies will be more profitable, and they may even do more drilling,” he said. This nuance, rarely covered in crypto media, is part of why Goldman believes the oil shock is manageable rather than permanent.
AsCNBC’s live FOMC coverage confirmed, Goldman Sachs Asset Management’s Lindsay Rosner stated after the decision: “Despite higher inflation forecasts the FOMC retains an easing bias, with a narrow majority on the committee expecting cuts to resume this year. We still see room for two ‘normalization’ cuts in 2026, although their timing remains dependent on the length of the conflict.”
How did the FOMC’s March decision set the stage for Goldman’s forecast?Read: FOMC March 17–18 Rate Decision: How It Could Impact Bitcoin and the Crypto Market
5. What This Means for Bitcoin and Crypto
Goldman’s rate cut forecast is the most important macro variable for crypto in H2 2026. Here is why, and what each scenario means for digital assets.
Why rate cuts matter for Bitcoin: Lower interest rates reduce the opportunity cost of holding non-yielding assets like Bitcoin. When savings accounts pay 4%, Bitcoin’s potential returns face stiff competition. When rates fall to 3% or below, capital flows back toward higher-beta assets. Bitcoin has historically outperformed by approximately 28% in the 60 days following the first rate cut in an easing cycle, per MEXC Research data. In the 2024 rate cut cycle, Bitcoin’s rally was directly accompanied by accelerating spot ETF inflows.
Goldman’s two-cut scenario (base case): September and December cuts totaling 50 basis points. For Bitcoin, this scenario is meaningfully positive but not explosive, rate cuts at the margin, not a return to zero-rate conditions. The key transmission: lower rates → weaker dollar → improved risk appetite → ETF inflows accelerate → Bitcoin supply squeeze tightens. The MEXC Research team’s analysis has documented this exact chain across the 2024–2025 rate cut cycle.
Bank of America’s hike scenario (tail risk): A rate hike would be the worst macro-outcome for Bitcoin in 2026. It would signal inflation is structurally re-accelerating, not retreating, the opposite of what makes crypto attractive. Leveraged positions would face forced unwinding, ETF inflows would reverse, and the narrative of Bitcoin as a rate-cut beneficiary would be challenged directly.
The current position: Bitcoin is trading near $70,000, down from its pre-FOMC level of $74,000, as markets digest Powell’s hawkish tone. The 48–72-hour post-FOMC dip pattern has historically offered better entry points than the announcement itself. If Goldman’s September cut materializes, the H2 2026 window remains the most credible near-term macro catalyst for crypto recovery.
AsFinancialContent documented the “hawkish shock” and “bear steepening”, JPMorgan and Goldman Sachs equity shares climbed as investors priced improved net interest margins, while NVIDIA, Microsoft, and Apple absorbed selling pressure as higher discount rates hit growth valuations. Crypto sat in the same bucket as tech: higher-for-longer rates cut the present value of future returns. The two-speed market is not subtle; it is the clearest possible signal of what rate cuts eventually mean for risk assets.
How does macro liquidity connect to Bitcoin’s price cycle?Read: The 2026 Macro-Crypto Nexus: How U.S. Stocks, Gold, and Bitcoin Are All Telling One Big Story
6. What to Watch: Three Signals That Will Prove or Break Goldman’s Call
Goldman’s September cut call lives or dies on three data points between now and the FOMC’s next quarterly projection meeting in June.
Signal 1 — April and May CPI/PCE: If core PCE inflation prints above 3% in April, reflecting March oil prices fully embedded in the data, the September cut becomes implausible. If PCE holds at or below 2.8% with signs of moderation, Goldman’s transitory framing gets validated. This is the single most important data release between now and September.
Signal 2 — Oil price trajectory: Goldman’s entire thesis rests on oil being a temporary shock. Brent crude falling back toward $85–$90 by June supports the transitory view. Brent staying above $100, especially if it reflects a prolonged Strait of Hormuz closure rather than a short-term spike, invalidates it. Watch weekly IEA and EIA crude inventory reports as the leading indicator.
Signal 3 — Labor market data: Goldman’s optionality condition is unemployment rising to ~4.6%. Monthly non-farm payrolls and unemployment rate readings will tell whether the oil shock is beginning to slow hiring, which would create the labor market slack that gives the Fed permission to cut even with elevated inflation.
What is the full macro outlook for Bitcoin in 2026 and how do rate cuts fit in?Read: The Fed’s January 2026 Rate Pause: What It Means for Bitcoin Investors
7.Conclusion
Goldman Sachs is betting that the Iran War oil shock is an episode, not a regime change, even as the data behind it turns darker. US real GDP grew just 0.7% annualized in Q4 2025. February payrolls fell by 92,000. Unemployment hit 4.4%. Goldman now sees H2 growth at 1.25%–1.75% “stall speed.” Its two-cut forecast for September and December, the most dovish credible call on Wall Street, rests on a single thesis: supply-driven oil inflation is transitory, and the underlying disinflation trend in services and goods remains intact. Daan Struyven’s revised Brent forecast of $85/barrel and David Mericle’s September-December cut timing are two sides of the same view: oil is the problem and oil’s resolution are the catalyst.
The risks are real. Bank of America sees hikes, not cuts. Austan Goolsbee warned of the same. The Fed’s dot plot shows one cut at best. Markets now price 60% probability of no cut through July. Goldman is in the minority, and is fully aware of that.
For Bitcoin and crypto, Goldman’s scenario is the bull case: two cuts in H2 2026, a weaker dollar, recovering risk appetite, and ETF inflows resuming at scale. The bear case is Bank of America’s: persistent oil above $80, a hike, and another wave of deleveraging. Watch April CPI, Brent crude, and non-farm payrolls. Those three data points will decide which bank was right.
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8.Frequently Asked Questions (FAQ)
Q1: What is Goldman Sachs predicting for Fed rate cuts in 2026?
Goldman Sachs expects two 25-basis-point rate cuts, one in September and one in December 2026, bringing the federal funds rate from 3.50%–3.75% to approximately 3.00%–3.25%. This is Goldman’s revised forecast after the Iran War oil shock pushed back its original schedule of cuts planned for June and September. Chief US Economist David Mericle confirmed the view, while Lindsay Rosner at Goldman Sachs Asset Management described them as “normalization cuts” not emergency easing.
Q2: Why is Goldman Sachs still predicting cuts when oil prices are so high?
Goldman’s core argument is that oil-driven inflation is supply-side and transitory, not structural. Supply disruptions from geopolitical conflict raise prices temporarily, but they do not embed in the economy the way demand-driven inflation does. Once the Strait of Hormuz shock resolves, Goldman believes the underlying disinflation trend in services and goods will resume, giving the Fed the data it needs to cut in September. Goldman projects PCE inflation ends 2026 at ~2.9%, still above target, but falling enough to justify a modest easing.
Q3: What is Bank of America saying about Fed rate cuts?
Bank of America is far more hawkish; it has flagged the possibility of a rate hike rather than cuts. It identified three conditions that would push the Fed to raise rates: oil staying above $80/barrel, a strong labor market, and Powell remaining as chair. All three conditions are currently in place. Chicago Fed President Austan Goolsbee echoed this concern, warning a rate hike could follow if inflation continues rising.
Q4: What does Goldman’s forecast mean for Bitcoin?
Bitcoin has historically outperformed by ~28% in the 60 days after the first rate cut in an easing cycle. Goldman’s September cut scenario, if it materializes, would represent a meaningful macro tailwind for crypto: lower rates, a weaker dollar, improved risk appetite, and likely accelerating ETF inflows. Currently, Bitcoin trades near $69,000 after the Fed’s hawkish March 18 hold. The 48–72-hour post-FOMC dip pattern has historically offered better entry prices than the announcement itself. Goldman’s September cut, if it comes, would be the H2 catalyst crypto markets are waiting for.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial or investment advice. Cryptocurrency markets are highly volatile. Goldman Sachs forecasts are subject to change. Always conduct your own research and consult a qualified financial advisor before making any investment decisions.