Posted 11/13/2023, 9:22:00 PM
Goldman Sachs: Fed Rate Cuts Unlikely Until 2024 Due to Stronger Growth, Lower Recession Risk
- Goldman Sachs economists believe the Fed will hold off on rate cuts until Q4 2024 due to stronger than expected GDP growth and progress toward a soft landing
- They estimate just a 15% chance of recession in the next 12 months, much lower than the consensus view
- They expect GDP growth of 2.1% in 2024
- They believe the heavy lifting on rate hikes is likely over and conditions are in place for inflation to return to target
- They forecast the Fed will start cutting rates in 25 bp increments in Q4 2024 once inflation falls below 2.5%
- They expect rates to reach 3.5-3.75% by mid-2026, higher than last cycle's equilibrium