Goldman Sachs expects the US Federal Reserve to start cutting interest in the last quarter of 2024

Economists at Goldman Sachs said they now expect the US Federal Reserve to start its rate-cutting cycle in the fourth quarter of next year, later than previous forecasts of a cut in the second quarter.
The Fed on Wednesday kept the benchmark interest rate unchanged in the range of 5.25% – 5.5% and its forecasts showed that it is now expected to reduce by only 50 basis points next year, down from the full Reduction estimated earlier.
“Today, participants seem to be moving away from the view that tightening monetary policy could affect growth with a long delay next year, weakening one of the arguments for a reduction,”Goldman Sachs economists led by Jan Hatzius said in a note.
They added: “We think this means that inflation should fall more than we previously assumed that the Federal Open Market Committee would reduce it .”
Barclays expects a cut at each of the last three Fed meetings for 2024, meanwhile, Morgan Stanley still expects the first rate cut to be implemented in March next year.
The central bank’s quarterly forecasts showed that the interest rate may be raised again this year to reach the range of 5.50% -5.75%.
While Goldman and Morgan Stanley do not expect another rate hike this year, Barclays, Bank of America and Citigroup (NYSE:C) expect the Fed to provide another 25 basis point increase at the November meeting.