Goldman Sachs Now Expects Fed to Start Rate Cuts in September
Goldman Sachs is adjusting its timeline for when the U.S. Federal Reserve may begin lowering interest rates, signaling that the first move could come as early as September rather than the previously projected December.
The bank’s revised outlook is driven by new signals that inflationary pressure from U.S. tariffs may be softer than initially anticipated.
In a recent client note, Chief Economist Jan Hatzius and his team suggested there’s now a greater-than-even chance that the central bank will begin cutting rates in September. They cited several possible catalysts, including muted tariff impacts, a gradually easing labor market, and mounting disinflationary forces that could justify a policy shift.
The revised forecast includes three rate reductions—one each in September, October, and December—each expected to be a 25 basis point cut. If this materializes, the benchmark interest rate could end the year at a range between 3% and 3.25%, lower than Goldman’s earlier projection of 3.5% to 3.75%.
The analysts emphasized that while July’s meeting is unlikely to feature any change in policy, surprisingly weak employment figures could put it back on the table. Although labor conditions remain generally stable, signs of strain are beginning to appear. Finding employment is reportedly becoming more difficult, and shifts in seasonal hiring trends and immigration rules may weigh on jobs data in the near future.
Reflecting on recent trends, Goldman also drew parallels to 2019, when the Fed cut rates at back-to-back meetings as a form of preemptive support—something the bank believes could return to play if concerns about economic softening grow.
In short, the path to looser monetary policy may arrive sooner than markets expected, especially if economic indicators continue to show signs of cooling.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
