Goldman Sachs Revises Fed Rate Cut Forecast Amid Recession Concerns

According to PANews, Goldman Sachs has adjusted its expectations for Federal Reserve interest rate cuts, suggesting a higher risk of policy easing if an economic recession occurs. The investment bank now anticipates the Fed will initiate a series of rate cuts in June, earlier than its previous July forecast, as part of a precautionary easing cycle. In a scenario where the U.S. avoids recession, Goldman Sachs expects the Fed to implement three consecutive 25 basis point cuts, bringing the federal funds rate to a range of 3.5% to 3.75%. However, if the economy does enter a recession, the Fed is predicted to respond with more aggressive measures, potentially reducing rates by approximately 200 basis points next year. Considering the increased likelihood of a recession, Goldman Sachs' current weighted forecast indicates a total rate cut of 130 basis points in 2025, up from the previous estimate of 105 basis points. As of last Friday's market close, this outlook aligns closely with current market expectations.