Goldman Pushes 1st Fed Rate Cut Back to September
Goldman Sachs has officially pushed its forecast for the Federal Reserve’s first rate cut to September. This shift comes as the investment bank anticipates additional inflation data influencing the Federal Open Market Committee (FOMC) decisions.
Key details:
- September cut: Goldman now expects the Fed to make its first rate cut in September, rather than July.
- Inflation reports: The bank’s note highlighted the significance of upcoming inflation data: “Four additional CPI reports will be available by the September meeting, and if monthly core CPI inflation averages in the high 20s and core PCE in the low 20s, as we expect, then we think most FOMC participants will support a rate cut.”
- Previous forecast: At the end of April, Goldman still considered a July cut possible but acknowledged the potential for adjustments based on forthcoming data.
Why it matters: This adjustment reflects Goldman’s expectation of softer inflation reports leading up to the September meeting. The bank’s note underscores a cautious stance on rate hikes, emphasizing, “We continue to think that rate hikes are quite unlikely because there are no signs of genuine reheating at the moment, and the funds rate is already quite elevated.”
September It Is: Nick Timiaros, at the Wall Street Journal, noted on Twitter, “With Goldman Sachs changing its Fed cut call to September, most sell-side bank forecasters and other Fed tipsheets now see the first cut in September, with December the next-most-likely date for a rate reduction.”
The bottom line: Goldman’s revised forecast suggests a broader consensus forming around a September rate cut, with the possibility of further adjustments based on economic indicators.
