Goldman Sachs has revised its forecast on when it expects an Interest rate cut in the US! Here is the new date.

Goldman Sachs brought forward its interest rate cut forecast for the FED. The bank, which previously expected the interest rate cut process to start in December, now indicates that it could begin as early as September, emphasizing that the limited inflationary effects of tariffs have played a role in this decision.

The economic team led by Goldman Sachs Chief Economist Jan Hatzius stated in a note, "Although this situation is still not clear, we believe that there is more than a 50% chance of an interest rate cut in September. This could be due to the effects of weaker tariffs, larger disinflationary counterweights, and either a genuinely softening labor market or fears stemming from monthly volatility."

The bank expects the FED to make three 25 basis point interest rate cuts in the remainder of the year. These cuts are anticipated to occur during the meetings in September, October, and December. Additionally, the final interest rate expectation has been reduced to the range of 3-3.25%. The previous forecast was in the range of 3.5-3.75%.

Goldman analysts stated, "If there is a kind of insurance motivation in the FED's interest rate cuts, then making cuts in consecutive meetings, as in 2019, would be the most natural option." However, it was noted that a cut is not expected in July, and this could only come up if the employment data, which will be announced this week, comes in much weaker than expected.

The bank noted that the labor market is still "healthy", but nonetheless commented that "finding a job has become more difficult". It was also stated that seasonal effects and changes in immigration policy could pose downward risks to employment data in the near term.

*It is not investment advice.

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