Contrary to the Trump administration! Goldman Sachs CEO: The Federal Reserve does not need to cut interest rates quickly
Goldman Sachs CEO David Solomon stated that the Federal Reserve does not need to cut interest rates quickly, opposing the pressure from the Trump administration. He believes that the current policy rate is not suppressing the market and that investor sentiment is overly exuberant. The market generally expects the Federal Reserve to cut rates by 25 basis points, but Solomon and Cleveland Fed President Loretta Mester both believe that current inflation is above target, providing insufficient reasons for a rate cut. Solomon also mentioned the negative impact of trade policy on economic growth
According to the Zhitong Finance APP, Goldman Sachs CEO David Solomon stated that the Federal Reserve does not need to rush to cut interest rates. This contrasts with the Trump administration's pressure on the Federal Reserve to ease monetary policy. Solomon said at the Barclays Financial Services Conference, "From a risk appetite perspective, I don't feel that the current policy rate is particularly restrictive." He pointed out that investor enthusiasm in the market is currently on the overly excited side.
Based on futures contract pricing, the market generally expects the Federal Reserve to cut rates by 25 basis points at next week's meeting, and expectations for further cuts by the end of the year are also rising. JP Morgan stated in a report that if the Federal Reserve cuts rates as expected at the September 17 meeting, it could turn into a "sell the fact" event, where investors may choose to take profits.
Solomon's former colleague, current Cleveland Fed President Beth Hammack, also reiterated that she does not believe there is a reason to cut rates this month, as current data shows inflation remains above the Federal Reserve's 2% target and is trending higher.
Recently, Goldman Sachs has been facing fierce backlash from the Trump administration. Last month, President Trump criticized Goldman Sachs for its research on his tariff measures, accusing Solomon of failing to publicly praise his administration's achievements, and even mocked the CEO on social media, saying Solomon "might as well focus on being a DJ rather than worrying about running a large financial institution."
Scott Bessent, the U.S. Treasury Secretary who suggested last month that the Federal Reserve should cut rates by at least 150 basis points, further intensified his criticism of Goldman Sachs over the past weekend, denying its research on the impact of tariffs on American consumers and businesses. He stated on a program, "I had a pretty good career betting against Goldman Sachs."
In addition, Solomon mentioned that the overall environment he sees is generally constructive, but he also warned that "trade policy poses headwinds to growth," adding that "uncertainty has slowed investment." He stated that there are currently "some constructive forces countering some resistance and uncertainty."
