Goldman Sachs Predicts Federal Reserve Timeline for Slashing Interest Rates by 0.25% per Quarter: Report
Economists at Goldman Sachs believe that the U.S. Federal Reserve will start reducing its benchmark interest rate in the second quarter of 2024. They also predict that the Fed will not increase rates next month or in November. The decision to lower the rates is driven by the desire to normalize the funds rate once inflation is closer to the target. Fundstrat Global Advisors’ managing partner, Tom Lee, shares this view and believes that the Fed has finished with rate hikes. Lee points out that the recent CPI report indicates a decline in inflation, allowing the Fed to breathe easier. The CPI is an important metric that economists and traders rely on to track inflation rates and predict the Fed’s future actions. Last week’s CPI report showed a 0.2% increase in consumer prices in July, meeting market expectations.
Key Points:
– Goldman Sachs economists predict that the Federal Reserve will begin lowering its benchmark interest rate in Q2 2024.
– The Fed is expected to skip rate hikes in the coming months.
– The decision to lower rates is driven by the desire to normalize the funds rate once inflation is closer to the target.
– Fundstrat Global Advisors’ Tom Lee also believes that the Fed is done with rate hikes.
– The recent CPI report indicates a decline in inflation, allowing the Fed to have more breathing room.
Hot Take:
Goldman Sachs and Fundstrat Global Advisors’ predictions align with the current market sentiment that the Federal Reserve is likely to adopt a more accommodative monetary policy. The focus on normalizing interest rates once inflation is closer to the target shows a cautious approach by the Fed. This news is likely to be welcomed by crypto investors, as lower interest rates can potentially boost the value of cryptocurrencies.
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