Goldman Sachs Sees Fed Holding Rates Until 2027 After Strong Jobs Report
The bank now sees two cuts in 2027 as a stronger May jobs report and sticky inflation keep pressure on the Fed to wait.
- Goldman Sachs delayed its Federal Reserve rate cut forecast to 2027, pushing expected cuts from December 2026 and March 2027 to June and December 2027, according to Reuters.
- Strong jobs data prompted the revision; the economy added 172,000 jobs in May, more than double the 80,000 forecast, suggesting hiring momentum that complicates the case for immediate policy easing.
- Stocks fell sharply on Friday as investors reconsidered interest rate paths, with technology shares hit especially hard. Nomura also forecasted the Federal Reserve could remain on hold through 2026, according to Reuters.
- Markets priced in a 68.4% chance of a rate increase by December after the jobs data, up from 52% a day earlier, as inflation remains above the 2% target.
- Investors are shifting focus from hopes for cheaper money to earnings and productivity, while a delayed rate-cut cycle could keep borrowing costs elevated for consumers moving forward.
15 Articles
15 Articles
Goldman Sachs Sees Fed Holding Rates Until 2027 After Strong Jobs Report
Goldman Sachs has pushed its forecast for the Federal Reserve's next interest rate cuts into 2027, a move that shows how a stronger-than-expected U.S. labor market is reshaping Wall Street's view of the economy and monetary policy.
With Fed set to meet next week, December's rate cut now looks questionable
Six months ago, Federal Reserve officials were deeply divided over whether to cut interest rates for a third consecutive meeting. The rate cutters won the day, but the data since then has pointed toward that having been a mistake.Why it matters: With the first policy decision of the Kevin Warsh Fed on tap next week, an uncomfortable backdrop is the mounting evidence that the central bank overshot in its easing campaign last year.Job growth has s…
Times of India
Goldman Sachs pushes Fed rate-cut call to 2027 on strong US jobs data
Goldman Sachs now anticipates the U.S. Federal Reserve will maintain current interest rates through 2026, delaying any rate cuts until 2027. This shift, driven by robust economic and job growth, suggests a prolonged pause by the central bank. The firm cited stronger-than-expected payroll data and the need for inflationary pressures to subside as key factors.
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