Goldman Sachs Predicts Three Fed Rate Cuts This Year

Goldman Sachs forecasts the Federal Reserve to implement three interest rate cuts in 2025 amid weaker US job growth and stable unemployment, expected in September, October, and December.

Weak employment growth may lead to rate cuts, impacting cryptocurrency markets by encouraging risk appetite and potentially increasing investments in BTC, ETH, and other digital assets.

Three Fed Rate Cuts Expected Amid Weak Labor Market

Goldman Sachs has projected three Federal Reserve interest rate cuts in 2025, based on weak US employment data and tariffs’ muted inflationary impacts. The forecast, led by Goldman Sachs Chief Economist Jan Hatzius, suggests rate reductions in September, October, and December due to sluggish job growth and declining compensatory hiring. “We now see three 25 basis-point cuts in September, October and December. That would take the Fed funds rate to a range of 3.50% to 3.75%,” Hatzius said. “The very early evidence suggests that the tariff effects look a bit smaller than we expected, other disinflationary forces have been stronger, and we suspect that the Fed leadership shares our view that tariffs will only have a one-time price level effect. Norada Real Estate.

The rate cut expectations are grounded in current US job market conditions. Recent data indicates employment growth slowed to about 30,000 per month, while compensatory hiring—a crucial growth driver—shows signs of fading. Despite the stable headline unemployment rate, Goldman Sachs warns that a mild labor market slowdown can still prompt future rate cuts. A notable increase in unemployment could trigger a larger 50 basis point cut.

Market reactions have been mixed. Investors anticipate potential capital shifts towards riskier assets like cryptocurrencies as lower interest rates weaken the US dollar. This historically boosts demand for digital currencies. Key industry figures have yet to publicly react, awaiting confirmed Federal Reserve actions.

Bitcoin’s Market Performance and Future Prospects

Did you know? The last significant Fed easing cycle in 2019 coincided with Bitcoin’s price appreciation, highlighting the potential for increased risk asset demand when traditional yields fall.

According to CoinMarketCap, Bitcoin (BTC) has a current price of $115,162.04, a market cap of 2.29 trillion, and a 24-hour trading volume of $64.04 billion, reflecting a 38.81% increase. Although experiencing a recent decline of 2.77% over the past day, Bitcoin maintains market dominance at 59.05%. The digital asset’s performance over 60 and 90 days shows positive changes of 9.76% and 9.65%, respectively.

The Coincu research team highlights potential implications of the Fed’s anticipated rate cuts. With historical trends indicating a correlation between lower rates and increased interest in high-volatility assets, cryptocurrencies could benefit significantly. Investors may seek higher returns in digital assets as traditional avenues offer diminished yields.