Goldman Sachs Issues Inflation Warning After CPI Data Revision, Suggesting Fed May Delay Rate Cuts
February 13, 2026 — Wall Street’s standout investment bank, Goldman Sachs, warned policymakers and markets on Friday that inflation as measured by the Federal Reserve’s preferred gauge — the Personal Consumption Expenditures (PCE) price index — could prove more persistent than recent headline numbers suggest, potentially delaying expected interest rate cuts in the months ahead.
The alert follows the release of January’s Consumer Price Index (CPI) data, which showed inflation slowing to 2.4%, below expectations and marking some of the lowest annual price growth in almost a year. However, Goldman’s economists — led by chief economist Jan Hatzius — urge caution in interpreting the CPI’s cooldown as the final word on inflation.
PCE Outlook Diverges From CPI Trends
CPI — a widely cited measure of inflation for consumers’ everyday expenses — has drawn headlines for its surprising retreat in January. Yet the Federal Reserve bases its monetary policy more directly on the PCE price index, which captures broader spending patterns and different weightings across categories of goods and services.
In a research note shared with clients, Goldman analysts revised their forecast for core PCE inflation — which excludes volatile food and energy prices — to roughly 3.05% on a year-over-year basis, significantly above the Fed’s long-standing 2% target and even higher than the bank’s prior assumptions.
That divergence stems partly from how the two inflation gauges treat specific price segments. Electronics and technology-related consumer goods, for example, have gained more influence in the PCE basket, while used cars — which fell sharply in price in January — carry less weight in PCE than they do in CPI.
“A more pronounced rise in core PCE inflation suggests the last mile of disinflation may take longer to complete,” Goldman economists wrote, underscoring the risk that inflation pressures could remain entrenched even after CPI metrics show cooling.
Implications for the Federal Reserve and Markets
The Federal Reserve has maintained a cautious stance on rate cuts since late 2025, balancing its dual mandate of price stability and maximum employment. While inflation has broadly trended lower from the highs seen in previous years, the recent data — particularly if validated by PCE figures due for release in full later this month — may temper expectations of a near-term shift toward easier monetary policy.
Market pricing for future Federal Open Market Committee (FOMC) meetings has already reflected diminishing odds of imminent rate cuts. Tools that track fed funds futures put the probability of a quarter-point rate reduction at the March 18 meeting below 10%, with modest odds extending into April, indicating investor skepticism that inflation dynamics have softened enough to justify easier policy.
Goldman’s warning arrives amid a broader debate among economists over the trajectory of inflation and its drivers. While some analysts emphasize cooling price pressures and a decelerating labor market, others point to structural cost factors — including lingering effects of tariffs, supply constraints, and shifting consumer behavior — as potential sources of stickiness in price growth.
Signals to Watch
Investors and policymakers will closely monitor the upcoming PCE inflation release, with December data due Feb. 20 and January’s report scheduled for March 13. These figures will offer a clearer picture of whether the inflation slowdown seen in CPI translates into the Fed’s preferred measure, or if stubborn price pressures remain under the surface.
For now, Goldman’s revised outlook serves as a reminder that headline inflation declines do not always capture the full complexity of price dynamics — especially once markets start pricing in policy moves. If PCE inflation continues to run above the Fed’s comfort zone, the path to interest rate cuts could be prolonged, reshaping expectations for borrowers, investors, and households alike.
📊 What This Means for 2026
- Inflation gauge divergence: CPI may appear subdued, but PCE could tell a different story.
- Rate cuts at risk: The Fed may delay easing until inflation is firmly anchored.
- Market impact: Equities, bonds, and risk assets could react to renewed inflation uncertainty.
