Goldman Sachs expects the US Federal Reserve to cut interest rates three times this year. The bank predicts small 0.25% (25 basis points) cuts in July, September, and October.
Why the Cuts?
Goldman says there’s a growing risk of a recession due to rising tariffs and uncertainty in global trade. These pressures could slow down the economy, leading to job losses and weaker growth.
What Does the Fed Think?
Goldman’s Chief Economist, Jan Hatzius, says the Fed is more careful than the markets expect. The central bank isn’t in a hurry to cut rates like it was in 2019. However, if unemployment goes up, the Fed may be forced to act—even if inflation is still high.
Bottom Line:
Goldman Sachs believes that economic risks may push the Fed to reduce rates to support the economy, even though inflation remains a concern.
Trump called on the Federal Reserve to cut interest rates, saying that inflation is low, gas costs only $1.98 per gallon, and the economy is strong. The Fed is set to announce its interest rate decision on Wednesday, and markets are waiting to see the outcome.
