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Goldman Sachs Predicts Fed Rate Cut in September, Lowers Terminal Rate Forecast
Goldman Sachs has revised its U.S. monetary policy outlook, now anticipating a Federal Reserve rate cut as early as September. The adjustment comes amid easing inflationary pressures and reduced tariff-related economic risks.
Key Forecast Updates:
Earlier Rate Cut: A September easing is now likely, driven by cooling inflation and stabilizing economic indicators.
Lower Terminal Rate: The projected long-term federal funds rate has been trimmed to 3.00-3.25%, down from the previous 3.50-3.75% estimate.
Market Implications: The shift suggests a more accommodative Fed stance, potentially boosting equities and easing borrowing costs.
Potential Triggers:
Inflation Slowdown: Sustained disinflation trends may give the Fed room to act.
Trade Policy Impact: Weaker-than-expected tariff disruptions could reduce economic uncertainty.
If realized, this dovish pivot could signal a softer landing for the U.S. economy, though labor market data remains critical. Investors should monitor upcoming CPI reports and Fed commentary for confirmation.