Amid Recession, Fed May Cut Rates by 200

Goldman Sachs has adjusted its expectation for a Federal Reserve’s rate cut, believing that if an economic recession hits, the risk of the Fed further easing policy is higher, with rate cuts by 200 base points in the next year.

Goldman Sachs now expects the US Federal Reserve to start a series of rate cuts in June, which is earlier than the previously predicted July. The chances of the Fed going this route would be part of a precautionary easing cycle.

Goldman Sachs Predicts Recession and Fed Cut Rates

Goldman Sachs has assumed that if the US avoids a recession, the Fed will cut rates by 25 basis points three times in a row, bringing the federal funds rate to a range of 3.5%-3.75%. However, Goldman Sachs expects that if the economy does fall into a recession, the Fed will resort to a more aggressive policy response, cutting rates by about 200 basis points next year.

With every fluctuation in the market, the possibility of an economic recession has increased. As a result, the institution’s current weighted forecast indicates a total of 130 basis points of rate cuts by 2025, up from the previous 105 basis points.

Moreover, the CME FedWatch tool shows that the possibility of the next Fed target rate reaching 400-425 is 45.7%.

With Black Monday’s close showing that Japanese and South Korean stock markets experienced a sharp decline at opening—e.g., the Nikkei 225 Index opened down 1.9% on Monday, and the South Korean KOSPI Index opened down 4.3%—this possibility broadly aligns with the market situation. On the other hand, the global crypto market cap is $2.48 trillion, a 7.45% decrease over the last day.

Even as the global market continues to bleed, US President Donald Trump believes the market-manipulating sell-off is unintentional and that the market sometimes needs to “take its medicine.”

Also Read: Bitcoin Price at Risk: Bearish Signals Point to $76K Test

Written by
Ritu Lavania

Ritu Lavania is a versatile Web3 content creator with over three years of experience in the crypto space. She is part of the team at CryptoNewsZ, where she writes insightful and engaging content. She has also contributed to TheCryptoTimes and The Coin Edition, where her work has been well received by the crypto community. Skilled in research, creative writing, SEO, and cross-functional collaboration, she creates content tailored to diverse audiences. Passionate about education, she dedicates time to teaching kids and expressing herself through poetry. Always eager to learn, she continuously explores new trends in blockchain and digital assets. She believes in the power of storytelling to make complex crypto topics more accessible and engaging for readers worldwide.