Economists at investment bank Goldman Sachs (GS) have officially revised the date when they expect the U.S. Federal Reserve to begin cutting interest rates to June of this year.
Goldman Sachs had previously expected interest rates in America to start falling in May. The bank said it officially revised its outlook on rates after reviewing the minutes from the central bank’s January meeting.
Furthermore, Goldman Sachs now expects four interest rate cuts this year versus five previously, with rates being lowered in June, July, September, and December.
However, the investment bank now sees four additional rate cuts in 2025, up from three cuts previously. At the end of next year, Goldman Sachs expects the terminal rate to be at 3.25% to 3.50%.
Many economists and market observers had expected the Federal Reserve to start lowering interest rates at its March 20th meeting.
However, strong inflation and economic data in recent weeks has led most forecasts to be pushed out to May or June of this year.
In its new outlook, Goldman Sachs’ economics team noted two changes from the Fed.
First, with the slate of strong economic data recently, central bank officials appear to no longer be worried about keeping interest rates too high for too long.
Second, central bank officials want to see more evidence that inflation will approach its 2% annualized target before starting to cut interest rates.
Goldman Sachs’ stock has gained 7% in the last 12 months to trade at $390.47 U.S. per share.
