Goldman Sachs: If the economy does enter into a recession, the Fed may cut rates by 200 basis points next year

BlockBeats News, April 7th, Goldman Sachs adjusted its expectation for a Fed rate cut, believing that if an economic recession hits, the risk of the Fed further easing policy is higher. Goldman Sachs now expects the Fed to start a series of rate cuts in June — earlier than the previously predicted July — as part of a precautionary easing cycle.

Assuming the US avoids a recession, the Fed will cut rates by 25 basis points three times in a row, bringing the federal funds rate to a range of 3.5%-3.75%. However, Goldman Sachs expects that if the economy does fall into a recession, the Fed will take a more aggressive policy response, cutting rates by about 200 basis points next year.

Considering the increased possibility of an economic recession, the institution's current weighted forecast indicates a total of 130 basis points of rate cuts by 2025, up from the previous 105 basis points. As of last Friday's close, this outlook is broadly in line with current market expectations. (FXStreet)