Goldman Sachs drops 2025 Fed cut call, shifts final easing to 2027

After stronger-than-expected May U.S. payrolls, Goldman no longer expects a Fed cut this year and pushed its final two projected rate cuts to June and December 2027, while trimming the odds of two cuts next year.

49d ago

Fact Check

The substantive claim in the body — that after stronger-than-expected May U.S. payrolls Goldman no longer expects a Fed cut this year, pushed its final two projected rate cuts to June and December 2027, and trimmed the odds of two cuts next year — is corroborated by Reuters, Quartz, CryptoBriefing, and BlockBeats. The May 2026 payrolls came in at 172,000 vs ~85,000 consensus with 4.3% unemployment, and Goldman moved its prior December 2026 + March 2027 forecast to June + December 2027, while trimming its two-cut baseline confidence from 40% to 30% (per Quartz). The title's reference to '2025 Fed cut call' appears to be an error — Goldman actually dropped its 2026 cut call (the news is dated June 8, 2026) — but the body's substantive description matches the reporting precisely.

Summary

Goldman Sachs economists said on June 8 they no longer expect the Federal Reserve to cut interest rates this year after stronger-than-expected May U.S. payrolls reinforced the labor market’s resilience. The bank moved its final two expected rate cuts to June 2027 and December 2027 from December 2026 and March 2027, while still keeping two 25-basis-point cuts next year in its base case but lowering the probability to 30% from 40%. Goldman also lowered its 2024 U.S. unemployment forecast to 4.4% from 4.6%. The shift implies restrictive financial conditions may persist longer, a backdrop that can pressure liquidity and weigh on crypto and other risk-sensitive assets.

Terms & Concepts

25-basis-point cuts: Interest-rate reductions of 0.25 percentage point each
payrolls: A monthly measure of U.S. employment growth outside the farm sector
liquidity: Ease of moving money into assets