Goldman Sachssupersicbo: Postponing the Fed's first interest rate cut from July to September
Source: Zhao Ying from Wall Street
Goldman Sachs maintains forecast for two interest rate cuts this yearsupersicboThe second rate cut may be in December.
Goldman Sachs adjusted its forecast for the timing of the Fed's first interest rate cut, postponing its original July judgment to September.
On Friday, Goldman Sachs analyst Jan Hatzius pointed out in his latest report:
Earlier this week, we pointed out that pushing the Federal Reserve to cut interest rates in July requires not only better inflation data, but also significant signs of weakness in economic activity or job market data.
But with the stronger-than-expected manufacturing PMI data in May and the decline in initial jobless claims, a rate cut in July is unlikely to be achieved.
Goldman Sachs 'latest forecast is consistent with market expectations. According to CME FedWatch Tool, the probability of a rate cut in September is 54%, compared with only 12% in July.
Based on pricing in the swap market, the Fed's first interest rate cut was fully priced in December, and the probability of a second interest rate cut is less than 40%, compared with about 70% last week.
JPMorgan Chase and Citigroup are among the few investment banks still predicting action in July.
Goldman Sachs maintains its judgment that it expects the Fed to "cut interest rates every quarter or every two meetings," which means that the second rate cut will be postponed to December from the previously expected October. Goldman Sachs 'expectation for the Federal Reserve to cut interest rates twice in 2024 remains unchanged.
Goldman Sachs said:
First of all, we continue to believe that the Fed's interest rate cuts are "optional", so there is no need to rush it.
Secondly, although inflation data may improve further by September, the year-on-year level is still above the 2% target, making the decision to cut interest rates at that time seem "unwise".
Third, although the top management of the Federal Reserve and we are relatively relaxed about the inflation outlook, we are preparing to cut interest rates in the near future. However, some officials within the FOMC are still worried about inflation and are cautious about cutting interest rates.
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