Goldman Sachs Moves Federal Reserve Rate Cut Forecast to September

Goldman Sachs has revised its forecast for the Federal Reserve's interest rate cuts, now anticipating that the central bank will resume reductions in September. This adjustment comes as the firm reassesses the economic landscape, particularly the impact of tariffs and other disinflationary forces. According to Goldman Sachs, the "very early evidence" suggests that the effects of tariffs are smaller than previously anticipated, while other factors contributing to disinflation have been more pronounced. This shift in perspective has led the firm to believe that the probability of a September rate cut is above 50%. The decision is influenced by the potential effects of weaker tariffs and larger disinflationary pressures, which could prompt the Federal Reserve to act sooner than initially expected.

The macro Trade team at Goldman Sachs has also noted that the Federal Reserve's inclination to lower interest rates is becoming increasingly evident. This sentiment is echoed by the firm's economists, who have pulled forward their forecast for the next rate cut to September. Previously, Goldman Sachs had expected the cut to occur in December. The firm's revised outlook aligns with the broader economic indicators, which suggest that the conditions for a rate cut may be met earlier in the year.

Chief US Economist Marc Giannoni announced on July 1, 2025, that the expected Federal Reserve rate cut has been moved to September from December. The shifted forecast impacts cryptocurrency markets, affecting digital asset volatility and liquidity preferences amid macroeconomic uncertainties. Following strong non-farm payroll data, we now see a July rate cut as the base case. Additional labor market data and clarity on tariffs and fiscal policy remain key factors.

Immediate market implications include heightened volatility in risk-sensitive assets like Bitcoin and Ethereum, as both display strong dependencies on broad economic shifts. Prolonged high interest rates typically limit risk-on investments within the cryptocurrency sector. The anticipation of interest rate changes has historically led to increased short-term volatility in key cryptocurrencies, impacting trade volumes and liquidity within decentralized finance ecosystems. Prolonged uncertainty in interest rates impacts Bitcoin and DeFi token demand, affecting liquidity. Such economic projections underscore the need for adjusted investment strategies addressing macro shifts and rate dependencies.