Goldman Sachs Delays Expectations for US Interest Rate Cuts
Goldman Sachs has postponed its expectations for the timing of US interest rate cuts, now forecasting that the Federal Reserve will implement two cuts of 25 basis points each in June and September 2026, instead of the previously expected March and June timeframe.
The revision follows weaker-than-expected US nonfarm payrolls data, pointing to a gradual slowdown in the labor market, alongside stronger-than-anticipated GDP growth and a diminishing impact from tariffs.
David Mericle, Chief US Economist at Goldman Sachs, said that recent labor market data suggest the Federal Reserve is likely to wait until mid-2026 before beginning to cut interest rates, as inflation continues to move toward its target and the labor market regains balance.
Goldman Sachs now expects the federal funds rate to end 2026 within a range of 3% to 3.25%. The bank has also lowered its estimate for the probability of a US recession over the next 12 months to 20%, down from 30% previously.
The bank attributed the revised timeline to “meaningful progress in the inflation trajectory that had been temporarily obscured by a tariff-related boost,” as well as a labor market that remains relatively resilient but increasingly vulnerable to further cooling.
