U.S. economy remains resilient Goldman Sachs delays first Fed rate cut from July to September

According to foreign media reports on Friday (24th), due to signs that the U.S. economy is still resilient and is not suitable for loosening monetary policy, Goldman Sachs economists postponed their forecast for the Federal Reserve (Fed) to cut interest rates in July, believing that it will not be until September. Only then will interest rates begin to be cut.

According to foreign media reports on Friday (24th), Goldman Sachs economists postponed their forecast for the Federal Reserve (Fed) to cut interest rates in July due to signs that the U.S. economy is still resilient and is not suitable for loosening monetary policy, believing that interest rate cuts will not begin until September.
Goldman Sachs economists including Jan Hatzius noted in their latest report Friday that they noted comments from Fed officials earlier this week suggesting that a rate cut in July would require not only better inflation data but also economic activity or the job market. There was meaningful weakness in the data.
Goldman Sachs had been one of the last few banks on Wall Street betting that the Fed would begin cutting interest rates in July.
Nomura Securities earlier this week also extended its forecast from July to September and said the threshold for a rate cut appeared to have been raised.
The latest data released yesterday showed that U.S. business activity grew at the fastest pace in two years in early May.
Atlanta Fed President Raphael Bostic said later in the day that monetary policy has been less effective in slowing economic growth than in previous cycles, highlighting the need to keep interest rates high for a longer period of time to keep inflation down.
The Fed\’s first rate cut in December has been fully priced in, with the likelihood of a second rate cut this year being less than 40%, down from about 70% the week before, based on exchange market rate pricing.
Still, Goldman Sachs expects the Fed to cut interest rates twice this year, either quarterly or every other meeting, meaning the second cut would come in December.
In addition, JPMorgan Chase and Citigroup are still among the few investment banks that predict the Fed will cut interest rates in July.
Reports on durable goods orders and the University of Michigan\’s consumer confidence index released later on Friday will give investors further insight into the state of the U.S. economy.
U.S. Treasuries are headed for their first weekly decline this month, reflecting doubts about when policymakers will be able to ease monetary policy.

Like (0)
Previous May 24, 2024 1:09 pm
Next May 24, 2024 1:09 pm

Related posts