Goldman Sachs has adjusted its Federal Reserve expectations for rate cuts as it believes there is a high risk of further easing policies from the Fed in the event of an economic recession, and there will be a 200 basepoint increase next year.
Goldman Sachs is now hoping the US Federal Reserve will begin a string of rate cuts in June. This is earlier than previously predicted July. The possibility that the Fed will go this route is part of the precautionary mitigation cycle.
Goldman Sachs predicts recession and forecasts FRED reduction rates
Goldman Sachs expects the Fed will lower its 25 basis points three times in a row, increasing the federal fund rate to 3.5%-3.75% if the US avoids a recession. However, Goldman Sachs hopes that if the economy falls into a recession, the Fed will rely on more aggressive policy responses and cut around 200 basis points next year.
All market fluctuations increase the chances of an economic recession. As a result, the agency’s current weighted forecast shows that the rate reduction of a total of 130 basis points by 2025 has increased from the previous 105 basis points.
Additionally, the CME FedWatch tool shows that the next Fed’s target rate is 45.7% likely to reach 400-425.
Courtesy: CME FedWatch Tool
The end of Black Monday marks a sharp decline in stock markets in Japan and South Korea at the start of the season. EG, Sunday’s 225 index fell 1.9% on Monday, while South Korea’s Kospi index fell 4.3%. on the other hand, The global crypto market capitalization was $2.48 trillion, down 7.45% on the last day.
Despite the continued bleeding of the global market, US President Donald Trump believes that the sale that manipulates the market is not intentional and that the market needs to “take the drug.”
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