Goldman Sachs Delays US Interest Rate Cut Forecast

U.S. investment bank Goldman Sachs has revised its expectation for the start of the Federal Reserve's (the U.S. central bank, or Fed) benchmark interest rate cuts, pushing it back by three months to December of this year. The bank also analyzed that the timing for further rate reductions until March 2027 could potentially be delayed.

This revision stems from the fact that U.S. inflation is not being brought under control as easily as anticipated. Goldman Sachs projects that the 'core Personal Consumption Expenditures (PCE) price index,' which reflects the average change in prices of goods and services primarily purchased by U.S. consumers, could record around 3% this year, exceeding the Fed's target of 2%.

Goldman Sachs analysts concluded that the Fed can only begin to ease monetary policy when it gains sufficient confidence that inflation has stabilized, and these conditions are currently being met more slowly than expected. A delayed rate cut could lead to prolonged higher benchmark interest rates, increasing borrowing costs for companies and loan burdens for households, and could also act as a variable influencing the strength of the dollar and movements in Treasury yields.