David Solomon expects smaller rate adjustments, points to softening labor market
Goldman Sachs CEO David Solomon dismissed speculation of a 50 basis point interest rate cut by the U.S. Federal Reserve in September, even as some banks and market participants anticipate more aggressive easing.
Speaking to CNBC on Wednesday, Solomon said: “Whether or not we have a 50 basis cut, I don’t think that’s probably on the cards.”
Market expectations split
According to the CME FedWatch Tool, only 7.8% of traders expect a half-point cut at the Sept. 17 meeting, while 92.2% anticipate a 25 basis point reduction. Standard Chartered Bank recently raised its forecast to a 50-point move, citing weaker-than-expected August jobs data.
Solomon, however, aligned with the broader market consensus: “I’m pretty confident we’ll have a 25 basis rate cut.” He added that one or two additional cuts could follow this year, depending on how economic conditions play out.
Solomon highlighted signs of a cooling job market, noting: “There’s no question that when you look at the labor market, there’s a little bit of a softening.”
Analysts say a slowing labor market could give the Fed cover to trim rates gradually, though the central bank is unlikely to deliver an outsized move unless economic conditions deteriorate further.
Implications for crypto and markets
Lower interest rates typically reduce the appeal of bonds and other traditional investments, driving capital into riskier assets such as equities and cryptocurrencies. A 50-point cut could have provided a short-term surge in digital assets, with some traders claiming it would push crypto “through previous all-time highs.”
Still, sentiment platform Santiment cautioned that excessive hype around the Fed’s decision may signal a local market top, as overly bullish narratives can precede corrections.
Shifting forecasts from banks
Standard Chartered is not alone in updating its view. Bank of America analysts, who previously projected no cuts in 2025, now expect two 25 basis point reductions — one in September and another in December.
The Fed’s direction became clearer last month when Chair Jerome Powell signaled that a rate cut was possible during his speech at the Jackson Hole Economic Symposium in Wyoming.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.