- Goldman Sachs anticipates three Federal Reserve rate cuts in late 2024, exceeding Fed’s current plan of two reductions.
- Revised U.S. inflation forecast by Goldman Sachs suggests higher core PCE index reaching 3.5%, above previous 3.0% estimate.
Goldman Sachs recently updated its economic forecast, predicting that inflation in the United States could be higher than previously estimated.
Specifically, the bank raised its projection for the core Personal Consumption Expenditures (PCE) index to 3.5%, an increase from the earlier estimate of 3.0%. This change could prompt the Federal Reserve to respond with rate cuts.
According to Goldman Sachs, the Federal Reserve is likely to cut interest rates three times in the second half of 2024. This prediction is more aggressive compared to current Federal Reserve guidance, which implies only two rate cuts this year.
Goldman now expects core PCE to rise to 3.5% this year versus 3.0% under previous assumptions for less aggressive tariffs.They expect the Fed to cut three times in the second half of the year to address the hit to growth and employmenthttps://t.co/PAsjBvEtGc
— Wu Blockchain (@WuBlockchain) March 31, 2025
During its March policy meeting, the Fed held interest rates steady, maintaining levels set since December. Officials did indicate, however, that future rate reductions were possible later in the year.
Lower interest rates historically support risk assets, including cryptocurrencies. A reduction in borrowing costs can encourage investors to shift their money toward riskier markets. If the Federal Reserve cuts rates as aggressively as Goldman Sachs anticipates, the crypto market might experience increased buying activity in the second half of the year.
Currently, cryptocurrency prices are reacting cautiously. Bitcoin recently dipped 1.81% in 24 hours, falling to approximately $81,985. Major alternative coins, including XRP and Cardano’s ADA, have seen steeper declines, each dropping more than 7% during the same timeframe. Other popular tokens like Ethereum, Dogecoin (DOGE), and Solana’s SOL also lost value, falling between 2% and 3%.
This week, market participants will closely monitor economic indicators and upcoming speeches from key policymakers, including Federal Reserve Chairman Jerome Powell. Powell’s comments could offer further insight into future monetary policy and influence short-term crypto prices.
If Goldman Sachs’ scenario materializes, lower U.S. rates could create favorable conditions for cryptocurrencies later this year. Investors may consider such developments carefully when planning their market strategies over the coming months.
