wwwbaccaratcom| Goldman Sachs postponed the Federal Reserve's first interest rate cut to September and still expects two interest rate cuts this year

Goldman Sachs Group economists believewwwbaccaratcomThe Federal Reserve will only start cutting rates in September, and they postponed their original expectation of a July rate cut due to signs that the economy is still too strong to provide a reason to relax policy.

"Earlier this week,wwwbaccaratcomWe note that comments from Fed officials suggest that a July rate cut may require not only better inflation data, but also substantial signs of weakness in economic activity or labor market data,"Goldman Sachs economists including Jan Hatzius wrote in a report.

Before adjusting its forecasts, Goldman Sachs was one of the last banks on Wall Street to bet that the Federal Reserve would start cutting interest rates in July.

Earlier this week, Nomura Securities also pushed its forecast from July to September, saying that "the threshold for interest rate cuts seems to have increased." Goldman Sachs CEO David Solomon is even more hawkish than economists, saying he does not expect any interest rate cuts this year.

Based on the pricing of the swap market, the first time the Fed cut interest rates that the market fully absorbed was December. The chance of a second rate cut is less than 30%, compared with about 70% last week. At the end of 2023, the market once expected the Federal Reserve to cut interest rates for the first time as early as March.

Data on Thursday showed that U.S. business activity accelerated in early May, the fastest growth in two years. Atlanta Federal Reserve Bank President Raphael Bostic said later that day that monetary policy was not as effective as in previous cycles in slowing economic growth, reinforcing the need to keep interest rates higher for a longer period of time to curb inflation.