Goldman Sachs Forecasts Fed Rate Cuts from June

Goldman Sachs has adjusted its forecast, expecting the Federal Reserve to cut interest rates three times by the end of the year.

Goldman Sachs has revised the trajectory of the Federal Reserve’s rate cuts, reverting to its previous prediction of three rate cuts by the end of this year.

According to TheStreet, the modification forecasts that the initial cut in interest rates will occur in June of this year, which aligns with the more significant market consensus.

Goldman Sachs Rate Cut Prediction

Initially, experts from Goldman Sachs expected that the Federal Reserve would reduce interest rates for the first time in December 2024.

In the middle of December 2023, it was announced that the Federal Reserve would decrease interest rates three times, with the first reduction occurring in the third quarter of 2024.

This was the revision that it made to its projection. They planned to make four cuts in February, with the first one expected to occur in May.

The influential investing business has projected three reductions in interest rates this year, with the first one occurring in June. Furthermore, they want to implement four cutbacks in 2025 and one reduction in 2026.

According to their projections, the final interest rates will fall between 3.25 and 3.5%. Since December 2023, the market has priced in a total of approximately three rate reductions for 2024, with the first one expected to occur at the meeting in March.

However, consistent signals from economic data and the officials of the Federal Reserve themselves caused expectations of the same to significantly decrease.

In parallel, the Federal Reserve has further postponed the previously anticipated decrease in interest rates for June until September or later.

This may have an effect on the markets for cryptocurrencies. This heightens the expectation of the Federal Reserve reducing interest rates significantly beyond initial projections.

Jerome Powell, the chairman of the Federal Reserve, has already declared that he does not believe that the economy of the United States is on the verge of a recession.

Despite this, he brought up the fact that it is difficult to anticipate when the central bank will reduce interest rates and support current growth due to the ambiguity surrounding the possibility of inflationary gains.

When evaluating assets, investors have traditionally placed a significant amount of importance on the decisions made by the Federal Reserve on interest rates.

When interest rates decrease, it is common for the value of government securities to decrease, thereby making bitcoin and other cryptocurrency assets relatively more desirable.

As a result of the Federal Reserve’s decision to delay the reduction of interest rates, investors may choose to maintain their commitment to traditional assets for the time being.

This has resulted in increased volatility in the cryptocurrency markets. To make matters even better, a robust economy continues to sustain high levels of investor demand.

It is more advantageous to make riskier investments in growing economies where purchasing power is often stable. Given these circumstances, it is highly unlikely that the Federal Reserve’s decision will significantly slow down the current rate of expansion in the cryptocurrency markets.