Why Has Goldman Sachs Pushed US Fed Rate Cuts to June and September?
About the Policy Shift and Market Context
Goldman Sachs has revised its outlook on US monetary policy, now expecting the Federal Reserve to deliver two 25 basis point rate cuts in June and September, instead of the earlier forecast of cuts beginning as early as March. This adjustment reflects evolving macro data, persistent inflation dynamics, and the Fed’s renewed emphasis on maintaining credibility while steering the economy toward a soft landing.
While the absolute magnitude of easing remains unchanged, the timing shift is critical. In global markets, timing often matters more than direction, as liquidity flows, currency moves, and asset valuations adjust to the sequencing of policy actions.
This revised timeline signals that the Fed is in no hurry to ease financial conditions prematurely. Instead, it prefers to accumulate greater confidence that inflation is firmly anchored before pivoting. For investors, this recalibration has meaningful implications across equities, bonds, commodities, and emerging markets.
Goldman Sachs – Key Takeaways
🔹 Two rate cuts expected in 2026
🔹 Each cut sized at 25 basis points
🔹 First cut pushed to June
🔹 Second cut expected in September
🔹 Earlier expectation was March and June
The change is not cosmetic. It reflects a reassessment of how resilient the US economy has remained despite aggressive tightening over the past two years. Consumption, employment, and financial conditions have shown surprising durability, allowing the Fed to exercise patience.
Goldman’s revised call aligns with a broader market realization that the final leg of disinflation is proving slower than anticipated. Services inflation, wage growth, and housing-related components continue to moderate only gradually, making early cuts risky from a policy credibility standpoint.
Earlier vs Revised Fed Cut Expectations
| Broker View | Earlier Expectation | Revised Expectation |
|---|---|---|
| Goldman Sachs | March and June | June and September |
This postponement reinforces the Fed’s data-dependent stance. Instead of responding to market pressure or financial conditions, policymakers are anchoring decisions to inflation persistence and labor market balance.
From a global standpoint, delayed easing keeps US real rates elevated for longer, which has knock-on effects for emerging markets, currencies, and capital flows.
Strengths and Weaknesses of Delayed Fed Cuts
|
🔹 Inflation credibility preserved 🔹 Reduced risk of policy reversal 🔹 Financial stability maintained |
🔻 Prolonged tight liquidity 🔻 Higher borrowing costs for longer 🔻 Pressure on global risk assets |
One of the most important implications of this delay is on the US dollar. Higher-for-longer rates typically support dollar strength, tightening global financial conditions. For countries like India, this creates a mixed backdrop: while capital inflows may moderate in the near term, macro stability and growth differentials still offer relative insulation.
Equity markets often struggle during the waiting phase. Risk assets tend to rally on the expectation of cuts, then consolidate or correct as those cuts get pushed out. This phase separation explains why markets can remain range-bound even when the easing cycle is still expected.
In such environments, disciplined market participation becomes essential. Structured approaches, similar to how traders rely on calibrated signals such as a Nifty Tip, help avoid emotional overreaction to shifting timelines.
Opportunities and Risks for Global Markets
|
💡 Selective equity opportunities on corrections 💡 Attractive yields in high-quality bonds 💡 Currency hedging benefits |
⚠️ Volatility in risk assets ⚠️ Delayed EM inflows ⚠️ Earnings downgrades if growth slows |
For India, the delayed Fed easing cycle implies that domestic monetary policy retains flexibility. The Reserve Bank of India is less pressured to rush into rate cuts, allowing it to prioritize inflation management and financial stability.
Historically, Indian equities have performed best not at the exact moment of Fed cuts, but during periods when global liquidity becomes predictable. A clearly signaled June–September window provides that visibility, even if patience is required in the interim.
Bond markets also adjust differently. Longer-dated yields may stabilize as the peak policy rate is clearly behind us, even if front-end rates remain elevated for a few more months.
Valuation and Investment View
Goldman Sachs’ revised Fed call does not change the direction of monetary policy, only the timing. This distinction is crucial. Markets that price in cuts too early often face volatility when expectations reset.
Investors should focus on quality balance sheets, predictable cash flows, and sectors less dependent on immediate liquidity easing. Tactical volatility can be navigated using disciplined frameworks such as a structured BankNifty Tip, while maintaining long-term exposure to structural growth themes.
Investor Takeaway
Derivative Pro and Nifty Expert Gulshan Khera, CFP®, believes Goldman Sachs’ revised Fed timeline reinforces the “higher for longer, but not forever” narrative. The delayed cuts reduce near-term euphoria but increase the credibility and durability of the eventual easing cycle. Investors should stay patient, focus on fundamentals, and prepare portfolios for gradual liquidity normalization, with consistent macro insight available at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on US Fed Rate Cuts and Markets
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
