Goldman Sachs sees three consecutive Fed cuts starting with July meeting

Goldman Sachs chief economist Jan Hatzius writes that the firm is forecasting three consecutive 25bp rate cuts in July, September, and October while also noting that its probability-weighted Fed forecast remains dovish relative to market pricing, reflecting the higher risk of recession due to tariffs and trade policy uncertainty. Fed officials have recently highlighted the risks from tariffs to both sides of their mandate, and this week, Chair Powell should repeat that message, Hatzius writes. Goldman’s research note further notes that while the FOMC appears to be setting a higher bar for rate cuts than during the 2019 trade war, the firm does not believe that high inflation would deter it from cutting if the unemployment rate begins to trend higher as the tariff shock hits the economy.