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

Odaily Planet Daily News Goldman Sachs has adjusted its expectations for the Federal Reserve's rate cuts, believing that if a recession hits, the risk of the Fed easing policy further is higher. Goldman Sachs now expects the Fed to begin a series of rate cuts in June - earlier than the previous forecast of July - as part of a precautionary easing cycle. Under the basic scenario that assumes that the United States avoids a recession, the Fed will cut interest rates by 25 basis points three times in a row, bringing the federal funds rate to a range of 3.5%-3.75%. However, Goldman Sachs expects that if the economy does fall into a recession, the Fed will adopt a more aggressive policy response and cut interest rates by about 200 basis points next year. Given the increased probability of a recession, the agency's current weighted forecast shows a total rate cut of 130 basis points in 2025, up from 105 basis points previously. As of the close of last Friday, this outlook is basically in line with current market expectations. (Jinshi)