What happened
Goldman Sachs economists said they no longer expect the Federal Reserve to cut interest rates in 2026, pushing their forecast for the final cuts out to 2027. The Fed has held its benchmark at 3.50 to 3.75 percent, even after a soft June jobs report that showed just 57,000 new roles.
Inflation running near 4.2 percent and wage growth around 3.5 percent are keeping policymakers cautious.
Why it matters
The Fed sets the tone for borrowing costs worldwide. When it signals that rates will stay high, it tends to keep bond yields and lending rates firm across other economies, including the UK.
It also shows how tricky the picture has become: hiring is cooling, yet inflation is not falling fast enough to justify cheaper money.
Explained simply
Imagine the Fed as a driver easing off the brake very slowly. A weak jobs report is like a passenger urging the driver to speed up, but stubborn inflation is a wet road that makes the driver keep a firm foot on the brake. The result is that borrowing stays expensive for longer than many had hoped.
What it means for you
Higher-for-longer US rates make it less likely that global borrowing costs fall soon, which can keep UK fixed mortgage deals and personal loan rates firm. For savers, it supports the case that decent rates on cash ISAs and savings accounts may linger a while yet.
