Goldman Sachs Predicts Interest Rate Cuts by Fed and ECB

Goldman Sachs Forecasts Interest Rate Cuts by Federal Reserve and ECB

According to a recent report by Odaily, Goldman Sachs has predicted a strategic series of interest rate cuts by the Federal Reserve and the European Central Bank (ECB) over the next two years. This forecast is based on anticipated economic conditions and aims to provide insights into monetary policy adjustments.

Projected Rate Cuts by the Federal Reserve

Goldman Sachs anticipates that the Federal Reserve will implement a series of consecutive 25 basis point rate cuts beginning in November 2024. These cuts are expected to continue until June 2025, ultimately lowering the target range to between 3.25% and 3.5%. This forecast indicates a gradual easing of monetary policy aimed at responding to changing economic circumstances.

European Central Bank Cuts on the Horizon

In parallel, the investment bank forecasts that the European Central Bank will initiate its rate-cutting cycle starting in October 2024. An initial 25 basis point reduction is expected, which will be followed by additional cuts until the policy rate reaches a target of 2% by June 2025. These measures are viewed as necessary actions to bolster economic growth and stability in the Eurozone.

Implications of the Rate Cuts

• Economic Growth: The anticipated cuts are designed to stimulate economic activity by reducing borrowing costs.
• Market Reactions: Financial markets typically respond positively to lower interest rates, which could lead to increased investment.
• Inflation Control: The adjustments in rates may help in maintaining a stable inflation rate, aligning with the central banks' objectives.

Conclusion

Goldman Sachs's forecast on interest rate adjustments from both the Federal Reserve and the ECB reflects an evolving economic landscape. Investors and policymakers will need to monitor these developments closely to understand their broader implications on the global economy.