Market Analysis

Goldman Sachs economists, in their recent analysis, reiterated their expectation of two rate cuts this year, maintaining their forecast following a Federal Open Market Committee (FOMC) meeting that they described as "mostly uneventful but leaning dovish."

According to the economists, Chair Powell's remarks during the meeting's press conference echoed this dovish sentiment, despite the Committee acknowledging a "lack of further progress" on inflation. They noted Powell's firm stance against the possibility of interest rate hikes, citing his view that such hikes are unlikely given the current policy settings, which he believes are sufficiently restrictive.

Regarding the timing of potential rate cuts, Powell offered no clear indications but consistently emphasized a dovish stance on inflation. He downplayed the significance of recent inflationary upticks, highlighting ongoing wage growth and the absence of signs indicating an overheating economy. Powell also expressed confidence in stable inflation expectations and anticipated downward pressure on inflation from declining housing costs and supply-side improvements.

While acknowledging recent upside surprises in inflation, Powell maintained his forecast of overall inflation moving back down throughout the year, albeit with reduced confidence. Additionally, he assured that the upcoming November elections would not sway the FOMC's decision-making process regarding rate cuts.

In summary, Goldman Sachs economists, aligned with Powell's dovish stance, anticipate two rate cuts this year, with Powell emphasizing a cautious approach to inflation and downplaying the influence of external factors such as elections on monetary policy decisions.

Paraphrasing text from "Reuters" all rights reserved by the original author.