It’ll be well over a year before the next Federal Reserve rate hike, according to Goldman Sachs.

The analysts, led by chief U.S. economist Jan Hatzius, now expect the next hike in the fourth quarter of 2020, compared to their previous forecast of the first quarter of 2020.

Goldman’s change shouldn’t come as a surprise. In its March meeting, the Fed downgraded its rate hike expectations for 2019 to zero, compared to its previous forecast of two 2019 hikes, which was unveiled at its December meeting, much to the dismay of market participants.

Still, Goldman Sachs is watching the incoming data just like the Fed. Goldman’s forecast change largely surrounds weak inflation numbers, which warrant fewer rate hikes.

“The inflation numbers have surprised to the downside even as the goalposts for the next rate hike have shifted higher with the FOMC’s emphasis on muted inflation pressures and review of its policy framework,” they wrote.

The latest reading on the core personal consumption expenditure price index, the inflation gauge the Fed uses, rose only 1.8% year-over-year as of January. The Fed’s inflation target is 2%. Analysts were expecting growth of 1.9%.

Goldman sees more downward pressure for the core PCE.

“We now expect year-on-year core PCE inflation to slow to 1.64% in the March print and to end 2019 at 1.9%, vs. the 2.1% we had expected just a few weeks ago,” they said.

Low inflation — even after years of ultra-low interest rates — has confounded investors and economists alike for years.

Meanwhile, Goldman Sachs threw cold water on the idea of the Fed’s next move being a rate cut, a proposal sparked by a number of market participants given the recent spat of mixed economic data and the central bank’s sudden about-face on monetary policy that was communicated to the markets in January.

“The low level of the funds rate makes a “recalibration” cut very unlikely, and neither we nor Fed officials see the risk of recession as elevated,” they wrote. “As a result, the odds of rate cuts discounted in the bond market look too high.”

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Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.

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