Goldman Sachs: Fed has good reason to cut rates in July

On July 15, Goldman Sachs chief economist Jan Hatzius said they believe the Fed has "good reason" to cut interest rates at its July meeting, but did not change their prediction that the Fed will start cutting rates in September. According to the latest unemployment and inflation data, a federal funds rate of 4% is appropriate, compared to the current 5.25%-5.5%. As a result, rate cuts are expected to begin soon.

Reasons for acting in July include the volatility of monthly inflation, which could make a September rate cut difficult to explain if there is a temporary re-acceleration, and the undeniable motivation of the Fed in 'avoiding the start of rate cuts in the last two months of the presidential campaign'. While this does not mean that the Fed cannot start cutting rates in September, it is true that July would be more appropriate.

Translated with DeepL.com (free version)