Goldman Sachs Predicts Mid-2024 Interest Rate Cuts: Impact on Crypto

• US Federal Reserve Rate Cuts Predicted by Goldman Sachs
• Inflation within the Euro Zone Drops More Than Anticipated
• Possible Pause in Interest Rates by December 2023: Insight from the Federal Reserve
• US Inflation Decreases to 3.2%

US Federal Reserve Rate Cuts Predicted by Goldman Sachs

Goldman Sachs, a notable financial powerhouse, has forecasted that the US Federal Reserve could initiate rate cuts starting from the third quarter (Q3) of 2024. This prediction is hinged on forthcoming inflation and job market statistics, which may compel the Federal Reserve to reconsider its stance on rate increments. There is no strict timeline for when these rate cuts could occur, however, Goldman Sachs speculates that it might happen between Q3 and December 2024. The magnitude of the rate cut could be twice that of the reduction made in 2019, potentially lowering rates to 4.875%.

Inflation within the Euro Zone Drops More Than Anticipated

The Euro zone has experienced a greater than expected drop in inflation, decreasing to 2.4%. Jan Hatzius, an economic expert at Goldman Sachs, suggests that while immediate rate cuts may not happen due to healthy growth and strong labor market data, improving inflation metrics might expedite normalization efforts.

Possible Pause in Interest Rates by December 2023: Insight from the Federal Reserve

Recent Personal Consumption Expenditures (PCE) and Consumer Price Index (CPI) data suggest a potential cooling in inflation. Coupled with robust job reports, the US labor market appears resilient. The CME FedWatch Tool forecasts a 98.4% likelihood that the Federal Reserve will maintain the current interest rate target, which ranges between 5.25-5.50%. The announcement of US CPI data for November is imminent, and Federal Reserve Chair Jerome Powell's speech later this week could provide some insight into the Federal Reserve's strategy.

US Inflation Decreases to 3.2%

The upcoming release of the CPI data may have contributed to recent volatility in the cryptocurrency market. Bitcoin$42,260 -0.64%, for instance, dropped below $42k after overcoming the $44k threshold just last week. Nevertheless, analysts are predicting a cooldown in US inflation. Economists are predicting a 3.0% rise in the overall price index, along with a 4% increase in core categories. These figures denote a slowdown from October's 3.2%, which marked the first drop in three consecutive months. Inflation rates have experienced a significant decline since 2022, yet they remain above the Federal Reserve's 2% target.

Edited by Jonathan Stoker