Jan 12 (Reuters) – Goldman Sachs pushed back its forecast for U.S. Federal Reserve rate cuts on Sunday, now expecting two 25-basis-point reductions in June and September 2026 instead of the previously anticipated moves in March and June.
The shift follows softer non-farm payrolls data and reflects signs of a gradually weakening labor market, alongside stronger-than-expected GDP growth and fading tariff impacts.
“After the latest payrolls report, we see the Fed waiting until mid-year to cut as inflation falls toward target and the labor market finds its footing,” said David Mericle, chief U.S. economist at Goldman Sachs.
Goldman now expects the Fed funds rate to end 2026 at 3-3.25%, and has reduced its 12-month recession probability to 20% from 30%.
The brokerage said the revised timeline was driven by “meaningful progress on inflation that was masked by a one-time boost from tariffs,” and a labor market that, while stabilizing, remains at risk of further softening.
(Reporting by Akriti Shah in Bengaluru; Editing by Janane Venkatraman)
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