Goldman Sachs CEO refutes major forecasts of Fed rate cuts

Goldman Sachs CEO David Solomon denied the possibility of the Fed's sharp cut of 50 basis points in September. Not long ago, Standard Chartered Bank boldly predicted that the Federal Reserve would cut interest rates. In an interview with CNBC, Solomon expressed doubts about the possibility of a 50 basis point cut, which is consistent with the general consensus in the market. Only 7.8% of market participants expect the Fed to take such moves at its Sept. 17 meeting, according to data from the FedWatch Tool. By contrast, Standard Chartered recently adjusted its forecast, expecting the Fed to cut interest rates so dramatically, citing weaker than expected employment reports in August. However, Solomon believes that the Fed will follow current market sentiment and expects a smaller rate cut. "I'm very confident that we will cut interest rates by 25 basis points," he said, noting that the labor market is slightly weak, which could affect the Fed's decision-making. Solomon expects another one or two more interest rate cuts this year, depending on the macroeconomic situation. The upcoming Fed rate cut meeting is not only important to the overall market, but also to the cryptocurrency industry, as lower interest rates tend to make traditional investments such as bonds less attractive than assets with higher risk and higher returns. Despite market expectations, sentiment platform Santiment warned about a surge in discussions on September rate resolutions on social media. Historically, such a heated discussion around a single bullish narrative may indicate overexcitement in the market and may herald a local market top. Standard Chartered is not the only bank to modify its Fed's forecast for a rate cut. Analysts at Bank of America have also adjusted their expectations and are now expected to cut interest rates by 25 basis points twice. One in September and the other in December. This marks that the Fed has changed its previous position of not cutting interest rates in 2025. Federal Reserve Chairman Jerome Powell hinted in a keynote speech at the Jackson Hall Economic Symposium in Wyoming on August 22 that interest rate cuts may be cut in September.