Investing.com -- Two Wall Street banks have revised their Federal Reserve forecasts, pushing back expected rate cuts as sticky inflation and a resilient labor market reduce the urgency for easing, even as the outlook remains clouded by multiple supply shocks.

Goldman Sachs analyst David Mericle said the bank is delaying its final two forecast rate cuts by one quarter, now expecting reductions in December 2026 and March 2027.

"With energy cost passthrough likely to keep year-over-year core PCE inflation closer to 3% than 2% all year, we think that a combination of lower monthly inflation prints after the oil shock fades and further labor market softening will likely be needed for the FOMC to cut this year," Mericle wrote.

Goldman left its terminal rate forecast of 3%-3.25% unchanged but acknowledged a reasonable chance the Fed could conclude further cuts are unnecessary if the economy holds up.

Bank of America went further, removing its two 2026 rate cuts entirely and pushing them to July-September 2027.

Analyst Aditya Bhave cited a hawkish shift in Fed commentary, with even dovish officials such as Daly and Waller advocating for a pause.

"Inflation is stuck well above target," Bhave wrote, noting core PCE rose to 3.2% year-on-year in March, with oil shock passthrough still in the pipeline.

BofA also flagged fat-tail risks, assigning a 15%-20% probability to rate hikes, which it said would likely be framed as a reversal of last year's cuts, should unemployment fall to or below 4% and core PCE approach 3.5%.