In the week of October 2026, all eyes are focused on the same issue: whether the upcoming FOMC meeting will hit the brakes or the gas on interest rate hikes again. However, on the eve of the meeting, the signals from Wall Street and rating agencies are inconsistent. Moody's Chief Economist Mark Zandi has publicly stated that the Federal Reserve "will not and should not" raise interest rates again this week. He stands on the side of risk control, using Moody's internal "risk matrix" to remind clients that the U.S. economy is surrounded by increasing uncertainty, with one key risk being the Federal Reserve’s potential "misstep" in its path of rate hikes. Almost simultaneously, Goldman Sachs Research released a report on October 25 regarding the end of this rate hike cycle: they also expect the October meeting to "skip" a rate hike, but on the questions of "should we continue to hike" and "to what extent," Goldman and Moody's are clearly not on the same page. Goldman's baseline scenario is to raise rates only two more times, with the federal funds rate ending in the range of 3.25%-3.5%, considering December as the final step of this cycle; whereas Moody's is closer to the stance of "it's time to stop now," unwilling to tighten rates further. Compared to these two agencies, the market's response at the time was more aggressive: interest rate futures implied a peak federal funds rate of about 4.55%, equivalent to four more rate hikes from the current base. These three paths together represent the core divergence ahead of the meeting: Moody's advocates for a pause, Goldman bets on two more raises in the end, while the market is pricing in a higher peak, and this mismatch is directly reflected in the sentiment of risk assets—every speculation about dot plots and updates of reports are triggering minor adjustments to expectations for future rate trajectories, leading the stock market, credit, and crypto assets to find their respective positions on the same expected rate hike curve.

Moody's Sounds the Alarm: Rate Hike Missteps Become a Risk

Amidst the divergence of the three interest rate paths, Moody's appears particularly "counter-trend." Moody's Chief Economist Mark Zandi made it clear before this week’s FOMC meeting: "The Federal Reserve will not raise rates again this week, nor should it." In his narrative, the decision to raise or not raise rates is not just a mechanical response to inflation data but rather a weighing of a whole mix of risks; if the Federal Reserve continues to add pressure at the wrong time, it will become an independent source of risk rather than a "risk manager."

Supporting this judgment is Moody's internal "risk matrix" instead of a specific macro indicator or short-term market volatility. The function of this matrix is to systematically assess the "probability of occurrence" and "potential economic damage" of different types of risks within a time frame of 12 to 18 months and to compare their weights in the same coordinate system. Zandi's logic is: when the matrix shows overall risk rising, continuing to apply pressure through rate hikes will push point risks towards systemic risks, amplifying originally controllable volatility into more severe downturns and financial accidents. From this perspective, rate hikes are no longer a one-dimensional anti-inflation tool but a double-edged sword—each time rates are raised, inflation may be further suppressed, but what is also tied to it is a higher probability of economic slowdown, asset price adjustments, or even policy missteps being written into the risk matrix.

Goldman Bets on Final Rate Increases: Final Rates at 3.25%-3.5%

While Moody's positions "another rate hike" on the negative side of the risk matrix, Goldman Sachs submitted a contrary report on October 25. Its baseline scenario is that the October FOMC meeting will remain static, holding off until December to make another increase, defining this as the "final step on the gas pedal" of the current cycle. Under this trajectory, Goldman only expects two more rate hikes, corresponding to an ending federal funds rate in the range of 3.25%-3.5%, while the market was pricing a peak of 4.55%, implying a need for four additional rate hikes along a steeper path.

Supporting Goldman's "final rate hike" narrative are two seemingly contradictory clues: one is inflation, and the other is the financial environment. The report notes that core PCE year-on-year is still about 1.1 percentage points above the Federal Reserve's 2% target, indicating that inflation pressures have not genuinely retreated into the "safe zone," which constitutes a necessity for continued rate hikes in their view; but since September, the financial conditions index has already tightened by about 30 basis points, meaning that without additional rate increases, the cost of financing and risk preferences have already been helping the Federal Reserve "hit the brakes." In Goldman's narrative, this combination of tightening and loosening perfectly gives the Federal Reserve the space to raise rates two more steps and then stop, keeping the terminal rate in the narrow range of 3.25%-3.5%.

Market Bets on 4.55%: Discrepancy Between Institutions and Pricing

But in the trading halls, the story was written in another version. Goldman set its baseline endpoint at 3.25%-3.5%, only raising rates twice to cap it off, while at the same time, the interest rate curve wrote the peak federal funds rate at a high of about 4.55%—according to Goldman’s own calculations, this equates to four more steps. The gap between the numbers reflects two entirely different narratives: the market interprets the same inflation and employment data, believing more that the Federal Reserve will be forced to "raise rates until it peaks"; Goldman, however, believes that although inflation is still about 1.1 percentage points above the target, financial conditions have already tightened by about 30 basis points, and the Federal Reserve's reaction function will not follow market extreme expectations to the end.

If Moody's is brought into this discussion, this discrepancy becomes a "triangular collision." The conclusion from Moody's risk matrix is "no more rate hikes this week," viewing policy missteps themselves as a significant risk for the next 12 to 18 months; Goldman advocates for two more increases before stopping at 3.25%-3.5%; yet the market is pricing a higher peak rate of 4.55%, indicating a longer, steeper rate hike trajectory. With all three parties holding different views, expectations fluctuated repeatedly before the meeting, and asset prices reacted intensely to each new piece of information. In such an environment, risk assets, including crypto assets, had to not only digest the uncertainty of macro data itself but also endure the extra volatility caused by discrepancies in institutional and market pricing.

Risk Matrix Against Inflation Gap: Central Bank's Dilemma Intensifies

If Moody's "risk matrix" stretches the time frame to the next 12 to 18 months, Goldman focuses on the currently unresolved "inflation gap." Zandi sees a shadowy outlook based on the risk matrix: various risks will amplify over the next year, and he separately identifies "the Federal Reserve's misstep," viewing continued rate hikes as not just another technical operation but as a trigger that significantly increases economic damage. In contrast, Goldman is closely watching the current data—core PCE is still about 1.1 percentage points above the 2% inflation target, which means that under its framework, the Federal Reserve still has distance to reach “completion.”

This difference further widens based on changes in financial conditions: Goldman's report notes that since September, the financial conditions index has automatically tightened by about 30 basis points, meaning that without any rate hikes, the market itself has already pushed the financing environment tighter. For Zandi, this is precisely the reason to "not take further action"; adding more leverage would deepen the red blocks representing economic damage on the risk matrix; while for Goldman, this passive tightening is insufficient to close the 1.1 percentage point inflation gap, making "limited final rate hikes" a necessary step to keep risks within controllable levels. Thus, within the same macro reality, two policy narratives emerged: one advocating for a cautious stance of making no changes, and the other advocating for two more increases, bringing the current cycle to a close. These narratives collectively shaped a structural divergence in market expectations for the rate path, forcing asset prices to continuously reassess across different scenarios.

From the Federal Reserve to the Crypto Market: How to Read the Signals

From the pre-meeting expectations, the divergence between Moody's and Goldman is fundamentally a clash around "risk tolerance" and "inflation tolerance": Moody's anchors its views with the risk matrix, seeing the "Federal Reserve misstep" as a core threat for the next 12 to 18 months, hoping to minimize policy risk by immediately holding firm; Goldman, on the other hand, provides the "raise twice, endpoint at 3.25%-3.5%" narrative based on the fact that core PCE is still about 1.1 percentage points above the target and that financial conditions have tightened by about 30 basis points since September, trading off moderate additions for a higher tolerance for inflation. Meanwhile, the peak rate of 4.55% priced in by the market pulls the endpoint rate to the other end, resulting in the coexistence of three paths at the same time, directly widening the expectation range. Before the FOMC results are unknown and not fully digested, the interest rate curve has been forced to switch back and forth among these narratives. Any increase or decrease in the voice of any party would push risk asset prices to reprice among different scenarios, particularly for crypto assets, which are the most sensitive to expectations. For these highly risk-tolerant funds, the key to navigating complex macro signals lies not in betting on whether to "hike or not" at a single meeting but rather in focusing on where the endpoint falls, whether closer to Moody's "let's stop here," Goldman’s “3.25%-3.5% final stage,” or the previously priced market target of 4.55%, and whether the Federal Reserve ultimately chooses to tolerate more inflation or more growth risk within this range.

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