Goldman CFO "thumbs up" Fed's big rate cut: U.S. economic soft landing in sight

Goldman's chief financial officer, Denis Coleman, said on Tuesday that the Federal Reserve's 50-basis-point rate cut had put the US economy on a path to a soft landing. As Mr Coleman spoke, market participants questioned whether the Fed's big rate cut was timely enough to stem inflation without sending the economy into recession. Some analysts expressed concern about the US economic outlook, warning that similar big rate cuts could not prevent the economic downturn and global financial crisis of the early 21st century. The Fed's 50-basis-point rate cut on Wednesday was a surprise to some economists, its first such move since the early days of the 2019 coronavirus pandemic and the 2008 global financial crisis. Mr Coleman said on Tuesday: “I think the 50 basis points was a clear signal of a new direction. Hopefully this will release more confidence and significantly lower capital costs — perhaps even some more strategic moves by the end of this year.” He said: “As we go into 2025, this should improve the backlog in the whole market and promote activity in the whole market.” When asked whether the Fed's rate cut had ensured a soft landing for the US economy, Mr Coleman said he hoped and expected it would. “This is the consensus now,” Mr Coleman said. “Managing the economy through the turn has always been a very tricky business. But inflation is coming down, unemployment is under control, the Fed has started to cut rates and is on some sort of soft landing trajectory.” Not everyone believes the US economy will remain robust in the coming months. Jamie Dimon, chief executive of JPMorgan, said in an interview on Tuesday: “I'm a long-term optimist. But short term, I'm more sceptical than most.” “The market pricing seems to suggest things will be fine. That makes me cautious,” he added.