Goldman Sachs brings forward Fed rate cut forecast from December to September

Goldman Sachs pulled forward its forecast for the Federal Reserve’s next moves, now predicting the central bank will start cutting interest rates again in September, three months earlier than its previous estimate. Analysts say the tariffs imposed by President Donald Trump have had a milder effect on inflation than originally expected.

Goldman Sachs economists now see over a 50% chance that the Fed will lower borrowing costs in September. They point to duties' limited impact, disinflationary offsets, and growing labor market uncertainty as key factors. Analysts note that the regulator’s officials also appear unconcerned about tariffs posing a sustained risk to price stability.

Goldman Sachs is now forecasting three 25-basis-point Fed rate cuts this year—in September, October, and December. The bank sees little chance of any policy change at July's meeting, barring a sudden deterioration in employment data.