Goldman Sachs Predicts Federal Reserve Timeline for Slashing Interest Rates by 0.25% per Quarter: Report

Economists at the banking giant Goldman Sachs think the U.S. Federal Reserve will begin lowering its benchmark interest rate in the second quarter of 2024.

The bank’s economists also predict that the Fed will skip rate hikes next month and in November.

“The cuts in our forecast are driven by this desire to normalize the funds rate from a restrictive level once inflation is closer to target.”

The Goldman economists aren’t the only ones thinking this way. Fundstrat Global Advisors managing partner Tom Lee also predicted in an interview with CNBC earlier this week that the Fed is finished with rate hikes.

“I think [last week’s] CPI (consumer price index) report kind of shows that inflation’s on a glide path lower. The things that are still inflationary – like auto insurance, motor vehicle repair – aren’t things the Fed’s necessarily trying to target with higher rates, but it’s more of a supply-chain work-through.

So I think over the next three months, we could see core CPI at 0.2 or less. That would really allow the Fed to breathe easier, and that’s why I think the last hike was July.”

The CPI is relied on as a proxy to track inflation rates. Economists and traders tend to pay close attention to the metric because it can signal whether the Fed will continue to raise interest rates or not.

Last week’s CPI report indicated consumer prices rose 0.2% in July, which the White House described as “at market expectations.”

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