Goldman Sachs economists believe that the Federal Reserve may indicate a slowing of future rate cuts at its meeting later this week, and may skip a rate cut in January next year.

Although this American bank expects the Federal Reserve to still cut rates by 25 basis points on Thursday, recent comments suggest that there is a 'clear' desire from the Fed to temper the pace of rate cuts, and the terminal rate may also be higher than initially expected. Economists at Goldman Sachs, including Jan Hatzius, wrote in a report released last Sunday. This is due to the unemployment rate being lower than the Fed's forecast for 2024, while the inflation rate remains above target.

Goldman Sachs economists also pointed out that Federal Reserve officials have expressed a more open attitude towards the terminal rate and may be cautious about where to stop rate cuts.

They wrote, "The key question for the statement and press conference is whether the Fed emphasizes slowing the pace of rate cuts or continues to rely on meeting-by-meeting data-driven decisions. We expect to hear both messages, including the addition of a statement agreeing to slow the pace of rate cuts."

After sticky inflation data in November, expectations for Federal Reserve rates have changed, and other data also showed resilience in the labor market.

Goldman Sachs' view aligns with market pricing, which sees a 90% chance of a rate cut from the Fed this week but has largely removed the possibility of another rate cut in January next year. Goldman Sachs continues to expect the Fed to cut rates in March, June, and September next year, with terminal rate expectations slightly raised to 3.5%-3.75%.

The economists wrote, "Our baseline and probability-weighted Fed forecasts are more moderate than market pricing, a key reason being that we believe that under potential policy changes in a second Trump administration, the risks to interest rates are more two-sided than usually assumed."