Goldman Sachs Predicts Interest Rate Cut in Q2
Global investment bank Goldman Sachs has predicted that the Federal Reserve will start cutting interest rates in Q2 next year. According to Goldman economists, the cuts are driven by the desire to normalize the funds rate and not by a recession. They also expect the funds rate to stabilize at 3%-3.25%. Bank of America has also forecasted a rate cut in the second quarter of 2024.
Key Points:
- Goldman Sachs predicts interest rate cuts in Q2 next year
- Normalization, not a recession, is the driving factor for the cuts
- They expect the funds rate to stabilize at 3%-3.25%
- Bank of America has also forecasted a rate cut in Q2 2024
- The Goldman economists anticipate that the Fed will not raise interest rates at its upcoming FOMC meeting
Despite some Fed governors believing that additional interest rate hikes may be necessary to combat inflation, Goldman Sachs expects the Fed to come to the conclusion that a final hike is unnecessary. Fed Chairman Jerome Powell has stated that monetary policy will likely need to be restrictive for longer if economic conditions suggest it.
Hot Take
Goldman Sachs predicts that the Federal Reserve will begin cutting interest rates in Q2 next year. This prediction is driven by the desire to normalize the funds rate and not by a recession. While some Fed governors believe that more rate hikes may be necessary, Goldman Sachs expects the Fed to conclude that a final hike is unnecessary. Overall, the outlook suggests a potential shift in the Fed’s monetary policy in the coming months.
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