US Fed Rate Cuts To Start After Bitcoin Halving In Q3: Goldman Sachs

Investment bank Goldman Sachs on Monday said the U.S. Federal Reserve to start interest rate cuts next year, expecting the first rate cut to happen in the third quarter. The Fed officials have recently turned dovish on interest rate hikes, but believe further inflation and jobs data are required to decide on a potential pivot for rate cuts.

Goldman Sachs Predicts Interest Rate Cuts Happening in Q3 2024

Goldman Sachs now sees two interest rate cuts by the U.S. Federal Reserve next year due to cooling inflation, reports Reuters on December 11.

The investment banking giant earlier predicted the first rate cut in December 2024. Now, it asserts rate cuts to start in Q3. This will cause interest rates to fall to 4.875% by the end of 2024, bringing a much-needed bullish momentum in the markets.

“Healthy growth and labor market data suggest that insurance cuts are not imminent… But the better inflation news does suggest that normalization cuts could come a bit earlier,” said Goldman Sachs economist Jan Hatzius.

Last month’s CPI and PCE inflation cools substantially coupled with dovish sentiment. However, Friday’s jobs data came in stronger than expected and indicates the U.S. labor market is still strong.

CME FedWatch Tool shows a 98.4% probability of the Fed keeping rates unchanged in the FOMC meeting this week. The current target rate is 5.25-5.50%.

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How Bitcoin and Crypto Prices Will Impact?

The Fed officials remain skeptical of falling inflation and resonate to a dovish stance. Fed Chair Jerome Powell is under pressure to set plans for interest rate cuts. Traders brace for Fed rate decision this week, which will set a direction for the markets in the weeks to come.

A delay in Fed rate cuts could hinder BTC price rally during the Bitcoin halving, which is expected to happen in April. Bitcoin will undergo a correction in the event of a strong US dollar.

Institutional investors also seem to be moving away from the crypto market, with crypto funds inflows falling as compared to earlier weeks.

BTC price is currently trading at $42,160, paring earlier gains due to a broader selloff. The 24-hour low and high are $40,521 and $44,034, respectively.

Also Read: Crypto Market Selloff — Here’s Why BTC, ETH, XRP Prices Fell Sharply Today