The Fed made successive interest rate cuts in the final months of 2025. However, the outlook for 2026 does not look very positive.
At this point, Goldman Sachs revised its forecast regarding the Fed’s interest rate cuts.
According to Reuters, Goldman Sachs revised its Fed expectations, pointing to rate cuts in June and September instead of the previously expected March and June.
The bank now expects the Fed to cut interest rates by 0.25 percentage points twice, in June and September.
In this revision, Goldman Sachs cited the slower-than-expected decline in inflation and the resilient performance of the US economy as the main reasons.
While the bank expects the US economy to continue growing this year driven by tax cuts and real wage increases, it also anticipates inflation to gradually subside. Accordingly, Goldman Sachs predicts that the Fed may cut interest rates twice this year due to increasing uncertainties.
The bank notes that these factors increase the likelihood that the Fed will adopt a more cautious approach to monetary easing.
Goldman Sachs chief US economist David Mericle said, “Following the latest employment report, we expect the Fed to wait until mid-year to cut interest rates as inflation falls toward its target level and the job market stabilizes.”
Goldman Sachs also added that it expects the Fed’s federal funds rate to close 2026 at 3-3.25%.
*This is not investment advice.