As the Federal Reserve approaches the end of the current cycle of policy tightening as interest rates reach neutrality while inflation calms down, global markets have started to ask about the timing of the next interest rate cut.
A batch of major global banks and institutions have already started to speculate about the future of US interest rates and the proper timing for the start of easier policies.
In fact, Goldman Sachs expects the Fed to start easing its policies by the end of June 2024, through a series of gradual 0.25% interest rate cuts.
In a memo, Goldman Sachs economists expect the US interest rate cuts to be in desire of changing the policy path to a more bearish and supportive stance, as inflation approaches 2%.
However, there’s still a high chance the Federal Reserve might prefer to hold interest rates unchanged for most of 2025.
The main forecast though expects a 0.25% interest rate cut each quarter, starting from June 2024.
Fed policymakers recently raised their interest rate targets from 5.25% to 5.75%, while Goldman Sachs now expects interest rates to finally settle near 3.25%.
The US investment bank also expects the Fed to avoid an interest rate hike in September, and decide at the November meeting that the path of inflation has slowed up enough, to make interest rate hikes unnecessary.
Origin: Economies
