Goldman Sachs Predicts First Fed Interest Rate Cut in Q3 2024 – How Will Crypto Markets React?
Banking giant Goldman Sachs projects two interest rate cuts in the United States by the Federal Reserve in 2024 with the first to be announced in the third quarter.
A recent Reuters report states Goldman Sachs sees two rate hikes next year citing cooling inflation after it previously predicted interest rate cuts by December relying on present data available at the time.
To the crypto market, this pivotal forecast amid a bullish drive in the market as the prices of top assets including Bitcoin (BTC) and Ethereum (ETH) fueled to a yearly high this past week.
The Federal Reserve’s rate is at 5.25% although several traders anticipate a decline as inflation cools implying a potential rate of 4.875% in the country and several other jurisdictions.
Jan Hatzius, a lead financial analyst at Goldman Sachs, wrote in the analysis cited by Reuters that inflation cuts may come later as the labor market comes in stronger than expected in recent weeks.
“Healthy growth and labor market data suggest that insurance cuts are not imminent… But the better inflation news does suggest that normalization cuts could come a bit earlier.”
Although consumer prices were relative in most markets, the banking giant believes some participants may push for more cuts while others will hold still to avoid encouraging rapid price movements.
“Our inflation forecast is a touch lower, but FOMC (Federal Open Market Committee) participants will likely still prefer to err on the side of being less optimistic.”
Traditionally, interest rate hikes due to high inflation take away the uptick in growth of the market as investors tend to withdraw funds from riskier assets when borrowing becomes more difficult.
On the other hand, when the Feds and other banking
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