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

On April 7th, Goldman Sachs revised its anticipation regarding a Fed rate cut. It holds the view that in the event of an economic recession, the risk of the Fed implementing more accommodative policies becomes higher. Goldman Sachs now anticipates that the Fed will initiate a series of rate cuts in June - earlier than the previously projected July - as part of a precautionary easing cycle. Assuming that the US manages to avoid a recession, the Fed will lower rates by 25 basis points consecutively three times, bringing the federal funds rate to a range of 3.5% - 3.75%. However, Goldman Sachs expects that if the economy does enter a recession, the Fed will adopt a more proactive policy response, cutting rates by approximately 200 basis points next year. Given the enhanced likelihood of an economic recession, the institution's current weighted forecast indicates a total of 130 basis points of rate cuts by 2025, which is higher than the previous 105 basis points. As of the close of last Friday, this outlook is generally in line with the current market expectations. (FXStreet)