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>>Goldman Sachs Highlights Key Change in June and September Schedule for Fed Rate Cuts

Goldman Sachs Highlights Key Change in June and September Schedule for Fed Rate Cuts

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about 10 hours ago

Forecast Shift

Goldman Sachs now expects the Federal Reserve to cut the federal funds rate by 25 basis points in June and again in September 2024, moving the first easing from the previously projected March meeting. The bank cites a deliberate, measured response to lingering inflation and a still‑tight labor market. The current policy rate stays at 5.25‑5.50%, the highest in over two decades, to keep inflation near the 2 % target.

Data Driving the Revision

Strong January employment numbers, resilient consumer spending, and sticky services inflation prompted the timeline change. Minutes from recent Fed meetings showed policymakers adopting a cautious, data‑dependent stance. Goldman’s outlook assumes inflation continues to ease without a major economic downturn.

Implications of Delayed Cuts

Consumers will face higher borrowing costs for mortgages, auto loans, and credit cards longer than expected. Businesses may postpone investment until financing becomes cheaper, potentially slowing growth. The extended high‑rate environment could bolster the dollar and help anchor inflation expectations.

Market Reaction and Global Context

Bond yields have risen as investors price in the June start, while equity markets remain resilient, reflecting confidence in the economy’s strength. Other major banks have aligned with Goldman’s mid‑year easing outlook. Internationally, European and Asian central banks remain cautious, reducing pressure on the Fed to act earlier.