According to the sagely analysts at Goldman Sachs, the Federal Reserve appears more inclined to leave interest rates untouched for the remainder of the year, as if waiting for a particularly stubborn troll to finish its nap.
The bank has shoved its timetable for the final two rate cuts of this easing cycle further into the future, now envisaging cuts in June 2027 and December 2027, instead of the earlier guess of December 2026 and March 2027. One might say theyāve traded a swift hare for a very leisurely tortoise.
This revision follows a string of surprisingly robust economic data from the United States – the labour market refuses to take a sick day, and consumers continue to spend as if every day were Black Friday. Goldman notes that the latest employment figures have dulled the urge for policymakers to reach for the rateācut lever anytime soon.
The firm anticipates the unemployment rate will creep up only slightly, hovering around 4.4% by yearās end – a level still too low to justify a hasty easing spree, much like trying to cool a volcano with a teaspoon of water.
Inflation, meanwhile, remains a stubborn guest at the party. Goldman expects core inflation to linger above 3% throughout 2026, only edging toward the Fedās longāterm 2% goal in 2027, assuming the universe doesnāt decide to rewrite the rules of economics midāsentence.
The report highlights several inflationāfriendly accomplices: tariffs that cling like gum to a shoe, energy prices that refuse to take a holiday, ongoing geopolitical tensions in the Middle East, and the relentless march of AIāinfrastructure investment, which seems to be building a digital Tower of Babel.
Consequently, Goldman believes the Federal Open Market Committee will stay as cautious about cutting rates as a cat is about stepping on a wet floor, waiting for inflation to show more convincing signs of heading toward its target.
Under this updated outlook, the federal funds rate would eventually drift down to a range of 3.0% to 3.25% after the anticipated cuts in 2027 – a modest descent, akin to a glacier finally deciding to melt a little.
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2026-06-13 10:21