Goldman Sachs says the Federal Reserve is expected to keep interest rates unchanged for the rest of the year as the economy remains stronger than expected.
Goldman Sachs research has to be pushed return the forecast for the last two interest rate cuts during the friendly period. The bank now expects the Fed to cut rates in June 2027 and December 2027, compared to forecasts in December 2026 and March 2027.
The revised outlook follows stronger-than-expected economic data in the US, including continued resilience in the labor market and consumer spending. Goldman says the latest jobs numbers have reduced the likelihood that policymakers will be pressured to cut rates soon.
The company expects the unemployment rate to rise slightly from current levels, reaching around 4.4% by the end of the year. According to Goldman, the rate would be too low to warrant an immediate withdrawal from the Federal Reserve.
Inflation remains a key factor in the bank’s outlook. Goldman expects inflation to remain above 3% through 2026 before gradually moving closer to the Fed’s long-term target of 2% in 2027.
The report says a number of factors continue to contribute to the decline in prices, including tariffs, rising energy prices, ongoing conflicts in the Middle East and continued investment in smart manufacturing equipment.
As a result, Goldman believes the Federal Open Market Committee (FOMC) will remain cautious on rate cuts until inflation shows progress beyond its target.
According to the company’s forecast, the federal funds rate could drop to 3.0% to 3.25% following the rate cut in 2027.
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