Goldman Sachs CEO Foresees 25 Basis Point Federal Reserve Rate Cut over Larger Reduction
David Solomon, CEO of Goldman Sachs, has expressed skepticism about the likelihood of a 50 basis point interest rate cut by the US Federal Reserve in September. Speaking in a CNBC interview, Solomon dismissed the possibility of such a sizable reduction, stating, “I don’t think that’s probably on the cards.”
This comes shortly after Standard Chartered Bank raised its forecast for a half-point cut, citing weaker-than-expected US jobs data in August. However, market data from the CME FedWatch Tool indicates only a 7.8% probability of a 50 basis point cut at the Federal Open Market Committee meeting scheduled for September 17, with the majority of market participants anticipating a smaller adjustment.
Labor Market Softening Influences Rate Cut Expectations
Solomon acknowledged signs of a softening labor market, which could justify some easing of monetary policy. He conveyed confidence in a 25 basis point reduction, aligning with the broader market consensus that currently stands at 92.2% probability for such a move.
Looking ahead, Solomon suggested the possibility of one or two additional rate cuts later this year, contingent on evolving macroeconomic conditions. “I think you could see one or two other cuts, depending on how economic conditions play out from here,” he said.
Broader Financial Sector Adjusts Rate Cut Outlook
Standard Chartered is not alone in revising its rate cut expectations. Bank of America recently shifted its stance, now projecting two 25 basis point cuts—one in September and another in December—after previously forecasting no rate reductions in 2025.
Federal Reserve Chair Jerome Powell also hinted at a potential rate cut during his keynote speech at the Jackson Hole Economic Symposium on August 22, further fueling market speculation.
Implications for Crypto Markets Amid Rate Cut Speculation
The upcoming Federal Reserve meeting holds significant implications for cryptocurrency markets. Lower interest rates typically reduce the appeal of traditional fixed-income assets, potentially driving investment toward higher-risk, higher-reward options such as cryptocurrencies.
Nevertheless, sentiment analysis from Santiment warns that the surge in social media discussion around the anticipated rate cut could signal excessive market euphoria. The platform cautioned that historically, such spikes in bullish narratives often precede local market tops.
Crypto trader Mister Crypto highlighted this dynamic, suggesting that a 50 basis point cut could propel cryptocurrencies beyond previous all-time highs, although Solomon’s outlook favors a more conservative rate adjustment.
FinOracleAI — Market View
The Federal Reserve’s anticipated September rate cut is largely priced into current markets, with Goldman Sachs’ CEO reinforcing expectations of a modest 25 basis point reduction rather than a more aggressive 50 basis point cut. This tempered outlook reduces the likelihood of extreme market volatility but keeps the door open for gradual easing depending on economic indicators. Crypto markets remain sensitive to Fed policy shifts, but elevated social media hype may indicate short-term overextension risks. Investors should monitor labor market data and Fed communications closely for signals on the pace of future cuts.
Impact: neutral
