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FINANCIAL ANALYSIS

A 50 BP Rate Cut Is “Not In The Cards”, Goldman Sachs Exec Says

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A 50 BP Rate Cut Is “Not In The Cards”, Goldman Sachs Exec Says


Goldman Sachs CEO David Solomon doubts the Fed will cut rates by 50 basis points in September. How likely is this to happen?

Goldman Sachs CEO David Solomon does not expect the Federal Reserve to slash rates by 50 basis points this September. His remarks came during a CNBC interview where he stressed that a smaller adjustment was more realistic.

Rates Won’t Get Cut By Much

“I don’t think that’s probably on the cards,” Solomon said when asked about the possibility of a half-point cut. Instead, he leaned toward a quarter-point reduction and echoed the view of most market participants.

The CME FedWatch Tool shows that only 7.8% of traders see a 50-point cut happening this month. By contrast, 92.2% expect the Fed to move more cautiously with a 25-point cut.

Labour Market Still Strong, But Softening

Solomon noted that the job market has started to show signs of easing. He agreed that while employment remains relatively solid, the pace of hiring has slowed.

“There’s no question that when you look at the labour market, there’s a little bit of a softening,” he said.

Goldman Sachs’ internal analysis also shows that unemployment remains under 4%, which indicates resilience despite last year’s aggressive tightening cycle. That makes the case for rapid easing harder to justify.

Market Hopes and Crypto Reactions

The idea of a larger cut has gained traction in certain corners. Standard Chartered Bank recently raised its prediction, pointing to weaker-than-expected jobs data in August. Their call sparked discussions in financial markets and on social media.

Crypto trader Mister Crypto noted that a half-point cut would push digital assets to new highs. Lower rates tend to make riskier assets like crypto more appealing, as bonds and traditional savings instruments offer smaller returns.

At the same time, analysts at Santiment warned against overconfidence. They noted that surging chatter around the Fed’s move could be a sign of overheated expectations, which historically aligns with local market tops.

Different Views From Major Banks

Standard Chartered is not alone in predicting bigger changes. Bank of America recently moved the dial as well.

After holding a no-cut forecast for most of the year, it now expects two 25-point reductions this year. One would come in September, the other in December.

This adjustment comes after Fed Chair Jerome Powell’s August speech at the Jackson Hole Symposium, where he acknowledged that a rate cut in September was on the table. His remarks gave markets a sense that the central bank was prepared to ease, even though without committing to a large step.

Why Solomon Asks Traders To Be Cautious

Solomon believes decisions should remain tied to data, rather than speculative hopes. He explained that inflation control is the Fed’s top concern, and easing too quickly could undermine progress.

“The key question is whether the data continues to support a pause, or even a small reduction,” he said. A larger cut would require clear signs of declining inflation, without risking a steep downturn.

He also pointed out that the Fed’s communication strategy is another aspect. By tempering expectations, the central bank can avoid sudden market swings and keep its inflation-fighting credibility intact.

Implications for the Economy

For businesses and investors, the September decision will affect near-term outlooks in one way or another. A 25-point cut would be a sign of caution on the Fed’s part, and offer relief without risking instability. 

A 50-point cut, however, would point to deeper worries within the Fed about economic growth.

Bond markets and equities are already setting up around the expected outcome. 

A modest cut tends to support equities, while a bigger move could bring short-term volatility as markets reassess the Fed’s outlook.


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