Goldman Sachs has postponed its expectation for the Federal Reserve to cut interest rates until December 2026, with inflationary pressures being the main reason

Goldman Sachs has postponed its predictions for the next two Federal Reserve rate cuts to December 2026 and March 2027. The report indicates that the transmission of energy costs may keep core Personal Consumption Expenditures (PCE) inflation around 3% for the entirety of 2026, above the Federal Reserve's 2% target. Previously, the International Monetary Fund (IMF) also predicted that core PCE would not return to 2% until early 2027 at the earliest.

Goldman Sachs' U.S. economists believe that a cooling of monthly data and a weakening labor market need to occur before rate cuts happen. The Federal Reserve maintained the federal funds rate at 3.50% to 3.75% on April 29, with four dissenting votes, the most since 1992. According to CME FedWatch data, the market sees a 93.4% probability that rates will remain unchanged at the June 17 meeting. Lindsay Rosner from Goldman Sachs Asset Management previously stated that hawks may have the upper hand at the June FOMC meeting. For the cryptocurrency market, the delay in rate cuts tightens liquidity flowing into risk assets, and a stronger dollar tends to suppress the valuation of crypto assets.