Goldman Sachs economists announced that they continue to predict two interest rate cuts this year, with the Federal Open Market Committee (FOMC) meeting “mostly uneventful but dovish”.
The FOMC added a hawkish assessment to its statement that “no further progress has been made” on inflation so far this year. However, according to economists led by Jan Hatzius, President Powell gave a dovish message at the press conference.
“Our forecast remains unchanged and we continue to expect two rate cuts in July and November this year,” they added.
Economists emphasized that the most striking aspect of Powell's speech was that he took a strong step back against the idea of an interest rate increase. The Fed Chairman stated that a rise in policy rates “seems unlikely” and expressed confidence that current policy settings are restrictive enough.
Moreover, he noted that the Fed would need convincing evidence that it is not restrictive enough to consider a rate hike, and that evidence is not currently available.
“Powell hasn't given any major clues about the timing of the rate cut, but has consistently struck a dovish tone on inflation,” economists said.
*This is not investment advice.