Oil Could Decide the Fed’s Next Move

The Fed may have one more rate hike left. But the bigger question is whether it will actually be the last.

Goldman Sachs expects the Fed to raise rates again on October 27, potentially marking the end of the current tightening cycle. But there is one important condition: oil prices need to keep falling.

That matters because energy prices are feeding directly into inflation. A renewed oil surge could keep inflation elevated and force the Fed to stay hawkish for longer.

For now, the pressure is easing. Brent crude has fallen nearly 13% from its recent peak above $110 a barrel and is now trading below $100. Goldman expects it to fall further to around $85 by December.

That creates a crucial chain reaction:

Lower oil → weaker inflation pressure → less need for rate hikes.

But if oil turns higher again, the Fed's “final hike” story could quickly come under pressure.

For markets, the next Fed move may depend less on the Fed itself — and more on what happens to oil next.