Goldman Sachs says the Federal Reserve is likely to let inflation run higher than its 2 percent target.
The central bank has begun a monthslong review of its policy framework to consider alternative approaches to targeting inflation. Goldman believes the Fed will decide to allow overshoots of its inflation goal next year, which would take rate hike off the table.
"Our economists believe it is leaning toward adopting an average inflation targeting approach. If implemented, they believe this change would decrease the likelihood of further near-term policy tightening and lead to a small and gradual increase in both expected and realized price inflation," Goldman equity strategist Ben Snider said in a note.