Goldman Sachs expects three Fed cuts in 2025

Goldman Sachs predicts that the US Federal Reserve (Fed) will cut interest rates three times in 2025 as Donald Trump's import tariffs weigh on the country's economic growth.

The bank expects the US regulator to reduce the cost of borrowing in July, September, and November. The previous forecast predicted two rate cuts this year and one cut next year. 

Goldman Sachs economists also expect the average US levy to rise by 15 percentage points in 2025. This, in turn, will lead to an uptick in the country’s inflation rate, with year-end core personal consumption expenditures price index reaching 3.5% year-on-year, the organization suggests. 

Goldman Sachs also lowered its forecast for US GDP by 0.5% to 1% on a fourth quarter versus year earlier basis. The year-end unemployment rate is expected to reach 4.5%, which is 0.3 percentage point higher than the previous forecast. 

For now, the Fed leadership is downplaying the impact of rising inflation expectations, but is placing great emphasis on a potential increase in unemployment as a justification for cutting rates, Goldman Sachs believes.