Goldman Sachs: If the economy really falls into recession, the Fed may cut interest rates by 200 basis points next year

Odaily News Goldman Sachs adjusted its expectations for Federal Reserve rate cuts, seeing a higher risk of further easing if a recession hits. Goldman now expects the Fed to begin a series of rate cuts in June - earlier than its previous forecast for July - as part of a precautionary easing cycle.
In the base case scenario, which assumes the U.S. avoids a recession, the Fed will cut interest rates by 25 basis points three times in a row, bringing the federal funds rate to a range of 3.5%-3.75%. However, Goldman Sachs expects that if the economy does fall into a recession, the Fed will take a more aggressive policy response, cutting interest rates by about 200 basis points next year.
Taking into account the increased likelihood of a recession, the agency's current weighted forecast shows a total rate cut of 130 basis points in 2025, up from 105 basis points previously. As of Friday's close, this outlook was largely in line with current market expectations. (Jinshi)