Market Analysis

Goldman Sachs projected on Wednesday that the U.S. Federal Reserve would implement consecutive 25-basis-point (bps) rate cuts from November 2024 to June 2025, bringing the terminal rate to a range of 3.25%-3.5%.

The U.S. central bank had reduced the overnight rate by half a percentage point last month, expressing increased confidence that inflation will continue declining toward its 2% annual target.

Currently, the overnight rate, which influences interbank lending and consumer rates, stands at 4.75%-5.00%.

According to CME’s FedWatch Tool, markets are pricing in a 94.1% likelihood of a 25-bps rate cut at the Fed’s upcoming meeting, with only a 5.9% chance of no change.

Goldman Sachs also forecasted that the European Central Bank would lower rates by 25 bps at its Thursday meeting, anticipating further 25-bps cuts until the policy rate reaches 2% by June 2025.

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