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<Research>G Sachs Predicts Fed to Cut Rates by Total 2% This Yr; Half-Pt Cuts Each in Jun/ Jul/ Sep
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Before US President Donald Trump halted reciprocal tariffs on multiple countries or regions other than China for 90 days, Goldman Sachs issued a report on the US economy, in which the broker, following the announcement of a series of tariff implementations by the US, adjusted its US economic forecast to a recession (the one-year recession probability forecast lifted to 65%, which has been revised back down to 45% after Trump paused reciprocal tariffs on some countries for 90 days). At that time, Goldman Sachs predicted that the US GDP growth rate for 4Q25 would be -1%, and the unemployment rate would rise by 1.5 ppts to 5.7%, less severe than most past US recessions partly because the broker did not notice significant financial imbalances that needed to be resolved, private corporate balance sheets remained strong, and there would be room for tariff rate reductions in eventual trade agreements. In Goldman Sachs' estimate, the Fed would cut rates by about 2% (about 200 bps) this year, compared to its previous non-recession baseline forecast of 75 bps. Specifically, the broker expected rate cuts of 50 bps each in June, July, and September, and cuts of 25 bps each in October and December, by which time trade policy and the economy are expected to stabilize. AAStocks Financial News |
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