Goldman Sachs Cuts Fed Rate Cut Forecast to 75 Basis Points, Emphasizes Inflation Still Shows Downward Trend
Xinhua Finance Beijing, January 2 - Goldman Sachs recently released a report announcing a downgrade of its forecast for Fed rate cuts in 2025, from the original 100 basis points to 75 basis points. The report points out that market reports on the rebound in core inflation are exaggerated.
Goldman Sachs stated in the report that the annualized increase in core Personal Consumption Expenditures (PCE) inflation from September to November last year was 2.5%, slightly higher than the 2.3% in the previous three months, but still lower than the annual increase of 2.8%, indicating that the inflation level still aligns with the trend of a sustained decline.
The report also noted that the average PCE inflation data adjusted by the Dallas Fed showed an annualized PCE inflation of 2.4% from September to November last year, while the data for November last year was 1.8%, further confirming the signs of declining inflation.
Goldman Sachs believes that as the labor market tightens to levels seen in 2017, the annual wage growth rate has slowed to 3.9%, within the range of 3.5% to 4%. The report predicts that if productivity growth remains at 1.5% to 2% over the next few years, it will align with the 2% inflation target.