Goldman Sachs Delays Fed Rate Cut Forecast to September
Goldman Sachs delayed its Fed rate cut forecast to September and December. The bank cited inflation risks from the Middle East conflict as the primary factor.
The Goldman Sachs Group, Inc. has officially delayed its forecast for interest rate cuts by the Federal Reserve in the United States, citing a shift in the economic landscape driven by geopolitical tensions. The bank now expects two quarter-point reductions to occur in September and December, a significant departure from its earlier projection of a June start.
The revision is primarily attributed to rising inflation risks linked to the ongoing conflict in the Middle East, which has complicated the central bank's path toward easing monetary policy. Analysts at the firm noted that the previous expectation for a mid-year cut no longer aligns with current data trends.
In a detailed note issued on Wednesday, the bank explained the rationale behind the adjustment to its timeline.
"A June start now looks too early under our higher revised inflation forecast."
While the baseline scenario has moved to the third quarter, the bank maintained that the schedule remains sensitive to domestic economic indicators. Earlier cuts could still be on the table if the labor market shows signs of weakening more substantially or sooner than current models predict.
