On September 23, a week after the Federal Reserve raised interest rates to 3.75%-4.00% (its first hike since 2023, decided under Chair Kevin Warsh), Rob Kaplan, vice chairman of Goldman Sachs, said something that sounded almost contrarian at the time: markets were expecting more rate hikes than the Fed would actually deliver.

The disappointing September U.S. jobs data, published on Monday, October 5, together with a collapse in bets on another hike in October, now seem to point exactly in the direction Kaplan indicated.

Kaplan is not an ordinary commentator. He served as president of the Federal Reserve Bank of Dallas from 2015 to 2021, with a vote on the Federal Open Market Committee (FOMC), the panel that sets U.S. interest rates, before returning to Goldman Sachs, where he had already worked for more than two decades, rising to partner and head of operations, and where he is now vice chairman. That makes him one of the few Wall Street voices who combines first-hand experience in the room where monetary policy is made with the market reading typical of a major investment bank. His remarks came in the official «Goldman Sachs Exchanges» podcast, published on September 23, 2026 on the bank’s website under the title «Why Markets May Be Pricing in Too Many Fed Rate Hikes» and available in full there.

A labor market of “low firing, low hiring”

In the podcast, Kaplan said his baseline forecast remained a single further hike, in December, which would bring the Fed’s rate to the 4%-4.25% area, followed by a pause. «I think the market does expect more hikes than I currently think are likely,» he said.

The core of his analysis, however, was the state of the U.S. labor market, which Kaplan described with an expression that quickly gained currency on Wall Street: «I think we’re facing a low-firing, low-hiring labor market.» Companies, in other words, are not laying off workers en masse, but they are not hiring either: a fragile equilibrium, not real strength.

According to Kaplan, behind this sluggishness there is no single factor but a sum of supply shocks with little precedent in the textbooks: «Tariffs are a supply shock, just as weak labor force growth and the immigration crackdown are another supply shock,» he said, adding higher energy prices and the boom in artificial intelligence investment. In his view, that combination requires the Fed to move with caution to keep energy-driven inflation from spreading to the rest of prices, without overdoing further hikes.

Today’s data seem to accelerate Kaplan’s scenario

The September nonfarm payrolls report, released Monday morning in the U.S., showed just 29,000 new jobs against the 84,000-90,000 expected by analysts, with the unemployment rate rising to 4.2% from 4.1%. The figures describe exactly the «low-firing, low-hiring» market Kaplan talked about, but are even weaker than he himself had forecast barely two weeks earlier.

Markets reacted immediately. According to futures tracked by FXStreet, the implied probability of a Fed pause at the October 27-28 meeting rose to 82.3%, from just 35.8% a few days earlier. (The figure comes from a single market source and has not been cross-checked against the CME FedWatch tool.) In other words, if Kaplan believed on September 23 that markets were pricing in more hikes than the Fed would deliver, markets have now gone beyond even his own forecast of a final tightening in December, and are starting to price in the possibility that the Fed does not move rates at all in October.

That is a logical extension of Kaplan’s reasoning, not a direct comment by him on today’s data: the Goldman Sachs vice chairman has not yet spoken publicly about the September jobs report.

Why it matters beyond the United States

The path of U.S. interest rates is not an abstract matter for investors outside the U.S. It affects the euro-dollar exchange rate, and therefore the euro value of unhedged U.S. stocks, bonds and ETFs. It influences Treasury yields, which have hit multiyear highs in recent months and dragged European sovereign yields with them, the spread between Italian BTPs and German Bunds included. And it shapes the choices of the European Central Bank (ECB) itself, which looks to the Fed in calibrating its own response to the ongoing energy shock.

For the Fed, a pause arriving sooner than markets expected until a few days ago could ease pressure on the dollar and on global yields. But as Kaplan himself observed, the underlying causes (tariffs, immigration, energy, the AI capex boom) remain unresolved, and they will determine whether a pause is a destination or just a temporary interruption.

Editor’s note

This article was originally published in Italian on money.it by Ufficio Studi Money.it on October 06, 2026 as «Kaplan (Goldman Sachs): «Il mercato prezza più rialzi Fed di quanti ne siano giustificati». E i dati sembrano dargli ragione». It has been translated and adapted for an international audience by the Money.it International desk.