Goldman Sachs predicts: The Federal Reserve will start cutting interest rates in September, potentially by up to 50 basis points
Goldman Sachs expects the Federal Reserve to start cutting interest rates in September, with three consecutive cuts of 25 basis points each, and a potential 50 basis point cut if the unemployment rate rises. San Francisco Fed President Mary Daly pointed out the weakness in the labor market, indicating that the timing for rate cuts is approaching. New York Fed President John Williams is open to rate cuts but needs to ensure inflation is under control. The U.S. added far fewer jobs than expected in July, leading to increased market expectations for rate cuts. Nevertheless, Bank of America still believes the Federal Reserve will keep interest rates unchanged
According to Zhitong Finance APP, Goldman Sachs expects the Federal Reserve to start cutting interest rates in September, anticipating three consecutive rate cuts of 25 basis points each. The bank also stated that if the next employment report shows a further increase in the unemployment rate, the Federal Reserve may cut rates by an additional 50 basis points.
Earlier, several Federal Reserve officials spoke.
San Francisco Fed President Mary Daly stated that given the increasing evidence of a weak labor market and no signs of persistent tariff inflation, the timing for a rate cut is approaching. Daly also mentioned that two rate cuts of 25 basis points each this year still seem like an appropriate adjustment.
New York Fed President John Williams said the labor market "is stable, but we are indeed seeing a slowdown in job growth." He expressed an "open attitude" towards rate cuts, but the Federal Reserve still needs to ensure that inflation is under control.
It is reported that data released last Friday showed that the U.S. added only 73,000 non-farm jobs in July, far below market expectations. Even more concerning is that the job gains for May and June were revised down by a net 258,000. This series of weak signals has led the market to significantly raise expectations for a rate cut by the Federal Reserve in September.
Although the market expects the Federal Reserve to cut rates in September due to poor employment data, Bank of America still maintains the position that the Federal Reserve will keep interest rates unchanged
