Goldman Sachs: Predicts that the Federal Reserve will cut interest rates earlier to September and will cut rates three times this year.

Goldman Sachs has advanced its prediction of the timing of the Federal Reserve's interest rate cut, indicating that it expects the Federal Reserve to resume cutting rates in September instead of December, as the inflation impact from tariffs "appears to be smaller than expected." Goldman Sachs expects the Federal Reserve to cut rates by 25 basis points at the meetings in September, October, and December, and has revised its "final rate forecast from 3.5%-3.75% to 3%-3.25%." The bank's economic team wrote: "We believe the likelihood of a rate cut in September is slightly higher than 50%, as we see multiple paths to achieving this goal - tariffs having a limited impact, larger disinflation offsets, a soft labor market, or panic caused by monthly fluctuations. We suspect that the Fed leadership shares our view, that tariffs will only have a one-time impact on price levels." Goldman Sachs analysts stated: "If there is any motivation for an insurance rate cut, cutting rates at consecutive meetings (like in 2019) is the most natural choice. We do not expect a rate cut in July unless this week's employment data is significantly below expectations." Goldman Sachs pointed out that the labor market is still "healthy" and stated that "finding a job is becoming increasingly difficult, with seasonal factors and changes in immigration policy posing short-term downside risks to employment figures." At the same time, market expectations for a rate cut by the Federal Reserve have also increased. Earlier this month, some investors believed that the probability of a rate cut in July was close to zero, but now they expect a one in five chance of a rate cut, with a rate cut in September almost certain.