The Strategist

Goldman Sachs expects the Fed's first rate cut in September

05/27/2024 - 03:20

In response to recent remarks made by Fed officials, US bank Goldman Sachs Group has revised its prediction regarding when the Federal Reserve (Fed) would undertake a significant interest rate cut.

Unlike what was originally anticipated, Goldman now projects a 25-basis point rate drop in September instead of July. The market, which places a 54% chance of a September cut and a mere 12% chance of a July cut, is likewise in agreement.

The experts at the bank cited previous remarks made by Fed officials indicating that a decision to lower interest rates in July would necessitate not only a slowdown in inflation but also signs of a severe decline in the labor market or economic activity.

The experts at Goldman Sachs say that a rate cut in September is not a certain.

"We believe that the Fed's leadership has a lenient attitude on inflation and is prepared to lower interest rates as soon as possible. Nonetheless, some members of the Federal Open Market Committee (FOMC) are less inclined to vote in favor of a rate drop and are still more concerned about excessive inflation," the experts said.