Staff reporter

Goldman Sachs forecasts that the Federal Reserve will implement its next interest rate cut of 25 basis points in March 2025.

In a note released Friday, the bank indicated that this cut will likely be followed by two more reductions of the same size in June and September.

“We anticipate the Fed will announce a 25 basis point cut in March, followed by two additional 25 basis point cuts in June and September, resulting in a terminal rate range of 3.5% to 3.75%,” the bank stated.

Goldman also predicts that the Fed will slow its balance sheet reduction starting in January 2025, with a complete halt expected by the second quarter.

In terms of economic growth, Goldman Sachs projects U.S. real GDP will rise by 2.4% year-over-year in 2025. This growth is attributed to strong real income increases and improving financial conditions.

Core personal consumption expenditures (PCE) inflation is expected to decrease to 2.4% by the end of 2025, supported by easing shelter costs and wage pressures. However, moderate inflationary impacts from tariffs are anticipated.

The unemployment rate in the U.S. is projected to gradually decline to 4.0% by the end of 2025, reflecting ongoing strength in the labor market despite broader economic changes.

Globally, growth is expected to reach 2.7% year-over-year in 2025, fueled by improving financial conditions and rising disposable incomes. However, Goldman highlights potential risks from geopolitical developments, particularly shifts in U.S. policies, including increased tariffs on China and automobiles, reduced immigration, and new tax cuts under the anticipated Trump administration.

In the Eurozone, Goldman expects the European Central Bank (ECB) to continue cutting rates until mid-2025, while China’s GDP growth is projected to slow to 4.5% due to domestic challenges.