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A Word On Goldman’s 2024 Fed Cut Call
Let's be clear: All forecasts for the trajectory of Fed funds are guesses.
Anything can happen. Just ask the last five years, during which the Fed was compelled to i) pivot away from a shallow hiking cycle amid a trade war and incessant criticism from a boisterous US president with a bad social media habit, ii) return to the lower bound due to a pandemic, then iii) hike rates rapidly in the face of spiraling inflation exacerbated by the first land war in Europe since the Reich.
Given the sheer
“I dream of rate cuts” – The new hit show from Goldman Sachs! Tune in next quarter when rate cuts will happen even though inflation is still high and unemployment historically low because, dreams CAN happen.
“If the Fed were to venture a cut early next year and inflation persisted or picked back up, it could be quite a while before the second cut.” Arthur Burns and George William Miller might make a second cut quickly. I doubt that Powell wants to be linked to Burns and Miller and the possibility mentioned in the quote is why I doubt a first cut will occur as soon as Goldman says.