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Jun 14 - 02:55 PM

Goldman Sachs: Fed Call – Expected Rate Cuts Starting in September

By eFXdata  —  Jun 14 - 01:30 PM

Synopsis:

Goldman Sachs forecasts that the Federal Reserve will maintain the current federal funds rate range of 5.25-5.5% until September. The firm anticipates the first rate cut of 25 basis points to occur in September, followed by a steady quarterly pace of cuts until the terminal rate range reaches 3.25-3.5%.

Key Points:

  1. Current Rate Hold:

    • Fed Funds Rate: The Federal Reserve is expected to keep the current fed funds rate range at 5.25-5.5%.
    • Timing for Cuts: The first rate cut is projected for September.
  2. Rate Cut Schedule:

    • Quarterly Reductions: Following the initial cut in September, Goldman Sachs expects additional rate cuts to occur at a quarterly pace.
    • December Cut: Another 25bp cut is anticipated in December.
  3. Terminal Rate Range:

    • Final Target: The series of cuts is expected to continue until the federal funds rate reaches the terminal range of 3.25-3.5%.

Conclusion:

Goldman Sachs predicts that the Federal Reserve will maintain its current rate stance until September before initiating a series of quarterly rate cuts. These adjustments are expected to bring the federal funds rate down to a terminal range of 3.25-3.5% by the end of the cycle.

Source:
Goldman Sachs Research/Market Commentary

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