Goldman Sachs Strategists Predict Two More 25bp Rate Cuts in 2024 After Powell's Speech
In a recent speech, Federal Reserve Chair Jerome Powell hinted at the possibility of two more 25 basis point rate cuts in 2024, according to Goldman Sachs strategists. Powell emphasized that the Fed is not rushing to cut rates quickly and that the process will unfold gradually over time.
Powell referenced the September Summary of Economic Projections, indicating that the baseline involves two more cuts, but not necessarily more 50 basis point cuts. The pace of cuts will be data-dependent, with the FOMC ready to act as needed.
Despite describing the overall economy as strong, Powell expressed caution regarding the labor market. He noted that job creation may not be sufficient to maintain unemployment levels, and payroll growth has decreased significantly.
Goldman Sachs sees Powell's remarks aligning with their forecast of 25 basis point cuts in November and December, with a close call between 25bp and 50bp in November.
The Fed initiated its policy shift with a 50 basis point rate cut last month, the first reduction since 2020.
Analysis:
Federal Reserve Chair Jerome Powell's speech suggests a cautious approach to rate cuts, with a focus on data-driven decision-making. The possibility of further rate cuts in 2024 could impact borrowing costs, investment returns, and overall economic growth. Investors should closely monitor future Fed actions and economic indicators to make informed financial decisions.