Goldman Sachs Expects Fed Rate Cuts Starting September Amid Market Softening

Cryptocurrency bettors and economists are increasingly anticipating that the Federal Reserve will cut interest rates as early as September 2025, with a 50% probability of a 25 basis point cut according to Polymarket and Goldman Sachs now forecasting rate cuts starting three months earlier than previously expected. This shift is driven by disinflationary pressures and smaller-than-expected economic impacts from tariffs, alongside emerging signs of a softening labor market such as fewer job openings and slowing wage growth. There is also growing concern among economists that a sudden labor market downturn could prompt a larger 50 basis point rate cut later in the year, especially if unemployment spikes, signaling a potential economic slowdown. Meanwhile, President Donald Trump has publicly criticized Fed Chair Jerome Powell for maintaining what he calls “artificially high” rates and has called for Powell’s resignation and a congressional investigation into his testimony. Additionally, Federal Reserve researchers estimate a 9% probability that interest rates could hit zero within the next seven years, reflecting ongoing uncertainty about future monetary policy despite currently higher expected rates compared to the previous decade. The risk of reaching the zero lower bound remains a significant consideration for policymakers amid economic fluctuations.