Goldman Sachs expects to postpone the US interest rate cut until 2027

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Goldman Sachs expects to postpone the US interest rate cut until 2027

Goldman Sachs expects the board to keep Interest ratesexpected during the months of June and December 2027, instead of its previous expectations, which indicated two cuts of 25 basis points in December 2026 and March 2027.

Interest rates

This adjustment came after the release of a US jobs report that was stronger than expected, which indicated renewed labor market strength and gave the Federal Reserve more room to keep monetary policy unchanged despite inflationary pressures associated with the repercussions of the conflict in the Middle East.

Goldman Sachs thus joins a growing number of institutions that expect interest rates to continue for a longer period, after Nomura also expected last month that the Fed would continue to keep interest rates unchanged until 2026.

It said in a research note that the strong data on economic activity and employment also lowered the criteria for raising interest rates, not necessarily due to fears of overheating of the economy, but rather because the current strength of the economy reduces the risk that any potential rate hike later will look like a costly mistake.

She added. The prospects for raising interest rates are still weak, but they have become slightly more likely compared to previous expectations.

Goldman Sachs explained that it believes that the most likely scenario is to postpone the interest rate cut until the effects of Customs duties and the rise in oil prices linked to Iranian tensions and other war-related pressures, in addition to the core inflation rate for personal consumption expenditures (Core PCE) approaching the target of 2%, in addition to the slowdown in what it described as exaggerated demand resulting from the artificial intelligence boom.

On the other hand, data from the tool showed "CME Vidoč" According to Reuters, traders expect by 75.5% that the US Central Bank will reduce interest rates by the end of the year.