(Corrects attribution in paragraph 3) Jan 12 (Reuters) – Goldman Sachs pushed back its forecast for U.S. Federal Reserve rate cuts on Sunday, now expecting two 25-basis-point reductions in June and September 2026 instead of the previously anticipated moves in March and June. The shift follows softer non-farm payrolls data and reflects signs of a […]
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Goldman Sachs pushes back US Fed rate cut forecast after soft jobs data
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(Corrects attribution in paragraph 3)
Jan 12 (Reuters) – Goldman Sachs pushed back its forecast for U.S. Federal Reserve rate cuts on Sunday, now expecting two 25-basis-point reductions in June and September 2026 instead of the previously anticipated moves in March and June.
The shift follows softer non-farm payrolls data and reflects signs of a gradually weakening labor market, alongside stronger-than-expected GDP growth and fading tariff impacts.
After the latest payrolls report, we see the Fed waiting until mid-year to cut as inflation falls toward the target and the labor market finds its footing, according to Goldman.
Goldman now expects the Fed funds rate to end 2026 at 3-3.25%, and has reduced its 12-month recession probability to 20% from 30%.
The brokerage said the revised timeline was driven by “meaningful progress in 2025 that was masked by a moderate one-time boost from tariffs,” and a labor market that, while stabilizing, remains at risk of further softening.
(Reporting by Akriti Shah in Bengaluru; Editing by Janane Venkatraman)