Goldman Sachs: If the economy really falls into recession, the Federal Reserve may cut interest rates by 200 basis points next year

2025-04-07 11:12:35
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ChainCatcher message, Goldman Sachs has adjusted its expectations for Federal Reserve rate cuts, believing that the risk of the Fed further easing policy is higher if a recession hits. Goldman now expects the Fed to begin a series of rate cuts in June, earlier than the previously predicted July, as part of a preventive easing cycle.

Under the baseline assumption that the U.S. avoids recession, the Fed will cut rates three times by 25 basis points, bringing the federal funds rate down to a range of 3.5%-3.75%. However, Goldman expects that if the economy does fall into recession, the Fed will respond with more aggressive policy measures, cutting rates by about 200 basis points next year. Considering the increased likelihood of a recession, the firm's current weighted forecast shows a total rate cut of 130 basis points by 2025, up from the previous 105 basis points. As of last Friday's close, this outlook is largely in line with current market expectations.

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