Goldman Sachs has revised its forecast, anticipating three Federal Reserve rate cuts in 2025 as a result of weakening tariff impacts and labor market conditions.
Fed Rate Cuts Forecast
Goldman Sachs expects the Federal Reserve to cut interest rates three times in 2025. According to Chief Economist Jan Hatzius, the cuts are projected to be 25 basis points each in September, October, and December due to weaker-than-expected tariff effects on inflation.
Market Impact
The market impacts of these rate cuts could be significant, particularly for the cryptocurrency markets. Historically, such monetary actions improve risk sentiment, leading to increased demand for assets like Bitcoin and Ethereum. A shift in asset allocation is anticipated as lower interest rates generally encourage investment in riskier assets.
Broader Implications
The financial community may view these cuts as a response to macroeconomic conditions, potentially stimulating investment and lending activity. Previous policy moves have correlated with increased crypto valuations, suggesting possible benefits for cryptocurrency markets.
Goldman Sachs' forecast regarding the Federal Reserve's rate cuts in 2025 may impact financial markets and cryptocurrencies, enhancing liquidity and investment conditions.
