Goldman Sachs: If the economy really falls into recession, the Federal Reserve may cut interest rates by 200 BP next year.

Jin10 reported on April 7 that Goldman Sachs has adjusted its expectations for interest rate cuts by The Federal Reserve (FED), believing that if an economic recession occurs, the risk of The Federal Reserve (FED) further easing policy is higher. Goldman Sachs now expects The Federal Reserve (FED) to start a series of interest rate cuts in June—earlier than the previously predicted July—as part of a preventive easing cycle. Under the baseline assumption that the U.S. avoids recession, The Federal Reserve (FED) will cut rates three times by 25 basis points each, bringing the federal funds rate down to a range of 3.5%-3.75%. However, Goldman Sachs expects that if the economy does enter a recession, The Federal Reserve (FED) will respond with a more aggressive policy, cutting rates by about 200 basis points next year. Given the increasing likelihood of an economic recession, the agency’s current weighted forecast indicates a total cut of 130 basis points by 2025, up from the previous 105 basis points. As of last Friday’s close, this outlook is largely in line with current market expectations.