Fed cut rates ahead of schedule?

Goldman Sachs expects the Federal Reserve to cut interest rates by 25 basis points in September, November, and December. In addition, Goldman Sachs stated that if the forecast is wrong and the August non-farm payrolls data is as weak as in July, there is a high possibility of a one-time 50 basis point rate cut in September. JPMorgan and Citigroup have already raised their expectations and expect the Federal Reserve to cut interest rates by 50 basis points in September. Since the outbreak of the pandemic or the credit crisis, the Federal Reserve has never made such a significant rate cut. Kevin Flanagan, Head of Fixed Income Strategy at asset management firm Wisdom Tree, said, 'As we saw at the end of last year, the market sometimes reacts excessively to the Federal Reserve's policies, leading to over-adjustment in the market. Going forward, we still need to validate the rate-cutting path based on more data.'