Fed Rate Cut Incoming? Goldman Sachs Predicts Slower Inflation, But Trump's Policies Could Stir Things Up

 

Hey everyone! Tonight, we’ll get the much-anticipated U.S. November CPI data, and Goldman Sachs has already weighed in with their prediction. They forecast that the U.S. core CPI for November will rise by just 0.28% month-on-month, slightly below market expectations of 0.3%. According to their latest research, prices on used cars, airline tickets, and autos are likely to keep climbing. But overall, they expect inflation to slow down in the coming months, with monthly CPI inflation rates dropping to around 0.20%-0.25%. A big factor here? Autos, housing rentals, and the labor market adjustments. That said, upgraded tariffs could still put some upward pressure on prices, offsetting some of the slowdown.

 

With inflation expected to cool off in the coming year, Goldman Sachs forecasts that the core CPI could rise by only 2.7% year-on-year by December 2025. That's a significant drop from where we've been. They also think that used car prices, which have been hot lately, will likely continue to rise strongly in November, though airline tickets and auto insurance might show more moderate increases.

 

Meanwhile, over in Washington, economists are predicting that the Federal Reserve will announce a 25 basis point rate cut at their December 18 meeting, bringing the federal funds rate to 4.25%-4.50%. Around 90% of economists are on board with this forecast, given the slower job market and persistent inflation concerns. It seems like the Fed is looking to make adjustments to keep the economy on track.

 

 

But here's the catch: Goldman Sachs is predicting steady inflation deceleration, which would typically give the Fed room to ease rates. However, Trump's policies, especially his trade policies, could push inflation higher than expected—think more tariffs, more supply chain disruptions, and possibly more inflationary pressure, especially in the core sectors.

 

What's your take on this? How do you see Goldman Sachs' predictions aligning with the broader economic outlook? Will the Fed go ahead with that rate cut and stick to their inflation targets, or will Trump's trade policies derail the whole thing? #ratecut  #cpi