According to Cointelegraph, Goldman Sachs CEO David Solomon has dismissed the possibility of the U.S. Federal Reserve implementing a significant interest rate cut of 50 basis points in September. This statement comes shortly after Standard Chartered Bank made a bold prediction of such a cut. In an interview with CNBC, Solomon expressed skepticism about the likelihood of a 50 basis point reduction, aligning with the broader market consensus. Data from the CME FedWatch Tool indicates that only 7.8% of market participants expect such a move at the upcoming September 17 Fed meeting. In contrast, Standard Chartered Bank recently adjusted its forecast to anticipate this level of reduction, citing a weaker-than-expected jobs report in August.
Solomon, however, believes the Federal Reserve will adhere to the prevailing market sentiment, which anticipates a smaller cut. He stated, "I’m pretty confident we’ll have a 25 basis rate cut." He also noted a slight softening in the labor market, which could influence the Fed's decision. Solomon anticipates the possibility of one or two additional rate cuts this year, contingent on macroeconomic conditions. The upcoming Fed rate cut meeting holds significance not only for the broader market but also for the cryptocurrency sector, as lower interest rates tend to make traditional investments like bonds less attractive compared to riskier, higher-reward assets.
Despite the anticipation, sentiment platform Santiment has issued a cautionary note regarding the surge in social media discussions about the September interest rate decision. Historically, such heightened chatter around a single bullish narrative can indicate excessive euphoria, potentially signaling a local market top. Standard Chartered is not alone in revising its Fed rate cut forecast. Analysts at Bank of America have also adjusted their outlook, now projecting two 25 basis point cuts, one in September and another in December. This marks a shift from their previous stance of no rate cuts in 2025. Fed Chair Jerome Powell hinted at a potential rate cut in September during his keynote speech at the Jackson Hole Economic Symposium in Wyoming on August 22.