Goldman Sachs, a global investment bank, has predicted that the Federal Reserve will begin cutting interest rates in the second quarter of next year. Their economists anticipate that the Fed officials will refrain from hiking rates at their upcoming meeting. Goldman Sachs envisions a gradual reduction of 25 basis points per quarter, although they acknowledge uncertainty about the pace. They believe that the cuts are driven by a desire to normalize the funds rate from a restrictive level once inflation is closer to the target, rather than being prompted by a recession. Additionally, they suggest that there is a significant risk that the Federal Open Market Committee (FOMC) will maintain the current rates due to the lack of urgency for normalization. Ultimately, Goldman Sachs predicts that the funds rate will stabilize between 3% and 3.25%.
Goldman Sachs is not alone in this prediction, as Bank of America also expects the Fed to initiate interest rate cuts in May next year. In terms of further rate hikes, Goldman Sachs economists do not anticipate any increases at the upcoming FOMC meeting. They expect that Federal Reserve officials will come to the conclusion that core inflation has slowed enough to deem a final hike unnecessary. The Fed has been actively combatting inflation, which has led to the benchmark interest rate reaching its highest level since 2001, between 5.25% and 5.5%. Some Fed governors, however, believe that additional rate hikes may be necessary in order to align inflation with the Fed’s 2% target. Federal Reserve Chairman Jerome Powell has expressed the possibility of further tightening in monetary policy if deemed appropriate based on prevailing economic conditions.
#GoldmanSachs #FederalReserve #interestrates #economists #ratecuts
#FOMC #inflation #inflationtarget #monetarypolicy #FedChairman
Image: https://weeklyfinancenews.online/wp-content/uploads/2023/08/gold1-5.jpg
Comments are closed.