Goldman Sachs Revises Rate Cut Forecast Amid Inflation Concerns

Goldman Sachs has revised its forecast for U.S. Federal Reserve rate cuts, now predicting reductions in September and December due to inflation risks from the Middle East conflict. Initially, rate cuts were expected to start in June, but the revised inflation outlook has altered these projections.

Goldman Sachs has adjusted its prediction for when the U.S. Federal Reserve will implement rate cuts, now expecting them in September and December instead of June. The change is attributed to rising inflation risks tied to the ongoing conflict in the Middle East.

The U.S. investment bank previously anticipated the initial reduction to occur in June, followed by another in September.

However, Goldman Sachs noted in a Wednesday report that the updated forecast is due to a higher inflation outlook. They also mention that earlier cuts could happen if the labor market deteriorates more swiftly and significantly than anticipated.