Economists at Goldman Sachs have adjusted their forecasts regarding Fed interest rates, anticipating earlier cuts than previously thought.
Goldman Sachs Rate Cut Forecast
Goldman Sachs predicts that the Fed may begin cutting interest rates in September 2025, which is three months earlier than previously expected. Rate cuts of 25 basis points are anticipated in September, October, and December 2025, as well as in March and June 2025.
Inflation and Labor Market Indicators
The report from Goldman Sachs highlights positive signs for inflation, including a reduced impact of tariffs on prices. However, there are also indications of a slowdown in the labor market, making it harder for individuals to find jobs.
Monetary Policy Outlook
Goldman Sachs has also revised down its expectations for the terminal Fed interest rate from a range of 3.50-3.75% to 3.00-3.25%. Economists note the need for flexibility in perceptions of the neutral interest rate.
Goldman Sachs’ forecasts indicate the potential for changes to the Fed's monetary policy approaches, especially in light of evolving economic conditions.
