Goldman Sachs predicts that the Federal Reserve will initiate interest rate cuts in September and make three consecutive cuts

The latest forecast from Goldman Sachs' economic research team suggests that the Federal Reserve may initiate interest rate cuts as early as September this year, and cut rates by 25 basis points each at its meetings in September, October, and December, lowering the expected terminal interest rate from 3.5% -3.75% to 3% -3.25%. Goldman Sachs believes that the weaker than expected inflationary impact of tariffs, weak labor markets, and data volatility may contribute to this outcome. Goldman Sachs analysts pointed out that if this week's employment data performs poorly, the probability of interest rate cuts will further increase, but it is expected that no action will be taken at the July meeting. In contrast, Morgan Stanley analysts believe that the likelihood of the Federal Reserve cutting interest rates in the near future is low, especially at the July meeting. Morgan Stanley expects the upcoming employment report to remain robust, although the growth rate has slowed down, it is not enough to prompt the Federal Reserve to accelerate action. In addition, Chicago Fed President Goolsby stated that the current unemployment and inflation levels in the United States are far below the stagflation levels of the 1970s, and tariffs or supply shocks are unlikely to trigger similar crises in the short term. However, Atlanta Fed President Bostic believes that the full impact of Trump's tariffs has not yet been apparent and expects the Fed to only cut interest rates once this year.