Goldman Sachs Predicts Fed to Cut Rates by September
- Goldman Sachs forecasts Fed rate cuts in September 2025.
- Disinflation and labor market changes influenced the decision.
- Potential effects on cryptocurrency and traditional markets.
The forecast shift could drive market volatility, with implications for both crypto and traditional assets. Affected markets may include those involved in risk-on investing, including major cryptocurrencies and DeFi protocols.
Goldman Sachs has revised its Federal Reserve rate cut projection, predicting reductions in September owing to persistent disinflation and labor shifts. This deviates from previous Wall Street consensus. Three 25 basis points rate cuts are anticipated by the end of 2025.
Goldman Sachs, not aligning with major firms like Bank of America and Morgan Stanley, sees a dovish trend amid economic shifts. Factors like disinflation and employment changes are significant. These are seen as key indicators behind their forecast adjustment. As David Mericle noted, “The odds of a rate cut in September are ‘somewhat above’ 50%… We’re penciling in 25-basis-point cuts in September, October, and December, as well as cuts of the same magnitude in March and June 2026.”
Immediate economic implications may include increased liquidity in traditional and digital markets. Lower interest rates typically favor risk-on assets, pushing capital flows into sectors such as cryptocurrencies. This could lead to potential market shifts.
Cryptocurrency markets may become bullish, promoting investments in Bitcoin, Ethereum, and DeFi tokens. Commodities and traditional assets might see decreased yields, impacting investor behavior. Financial markets often react strongly to changes in monetary policy.
Potential outcomes could include increased trading volumes and liquidity shifts towards decentralized finance. Historical data aligns rate cuts with heightened volatility and crypto market rallies. Such economic climates benefit risk-on investments, enhancing capital influxes.
