Fed to Cut Rates to 3.25%–3.5% by June as Recession Fears Ease: Goldman Sachs

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Goldman Sachs expects a series of consecutive 25 basis point Fed rate cuts ahead as fears of a U.S. recession ease.

According to The Economic Times, Goldman Sachs said on Wednesday that it expects the U.S. Federal Reserve to deliver consecutive 25-basis-point (bps) interest rate cuts from November 2024 through June 2025.

Last month, the U.S. central bank cut the overnight rate by half a percentage point, citing greater confidence that inflation will keep receding to its 2% annual target.

This comes as last month’s better-than-expected U.S. jobs data strengthens Goldman Sachs’ conviction that the next few FOMC meetings will bring smaller 25-basis-point cuts.

Goldman Sachs expects the Fed to reduce rates to a terminal funds rate of 3.25%—3.5% by June 2025, a prospect that breeds confidence in cryptocurrencies’ long-term outlook.

Fears that last month’s dovish rate cut would be too little, too late in tackling a looming U.S. recession are dissipating as stronger-than-expected U.S. jobs data foster optimism.

This follows a Goldman Sachs report earlier this month, de-escalating their anticipation for a US recession over the next 12 months to 15%, from its prior 20%, fuelled by signs of a still-solid job market.

The U.S. economy added 254,000 jobs in September, substantially surpassing Wall Street’s expectation of 147,000. The unemployment rate also dropped to 4.1%, while the annual pace of wage growth increased to 4.0% from 3.8% in August.

Meanwhile, the unemployment rate has returned below the threshold that activates the “Sahm rule” following a scare