Goldman Sachs no longer expects the Federal Reserve to cut interest rates this year, pushing its easing forecast into 2027 after stronger than expected US jobs data undercut the case for lower borrowing costs.

The bank now expects two 25 basis point cuts in June and December 2027. That replaces its previous forecast for cuts in December 2026 and March 2027, marking a more hawkish shift in one of Wall Street’s closely watched Fed outlooks.

The revision followed May’s employment report, which showed the US economy adding 172,000 jobs while unemployment held at 4.3%. The data suggested the labor market remains resilient despite elevated interest rates, giving the Fed less urgency to ease policy.

Goldman is not alone in turning more cautious. Other major firms have also delayed or reduced expectations for rate cuts as inflation remains above target and economic activity holds up better than expected.

The shift matters because rate cut expectations have been one of the main supports for risk assets. Lower rates typically reduce the appeal of cash and Treasuries, making speculative assets more attractive. A longer period of elevated rates does the opposite by keeping risk free yields competitive and liquidity tighter.