• Goldman Sachs Asset Management expects the Fed to proceed with planned rate cuts despite the latest inflation data
  • Moderating wage growth and fading inflation expectations support the case for gradual monetary easing
  • The firm forecasts 25 basis point cuts in October and December 2025, with further reductions expected in 2026

Goldman Sachs Asset Management said Thursday that the latest Consumer Price Index report offered no surprises significant enough to alter the Federal Reserve's planned path for interest rate cuts, with reductions expected to proceed as previously forecast.

According to people familiar with the matter, the investment giant's research arm sees moderating wage growth, fading inflation expectations, and a slightly softening labor market as supporting the case for gradual rate cuts. This comes despite recent headline inflation data and ongoing tariff impacts that had created some uncertainty among market participants.

"The data flow hasn't changed the fundamental picture," said one Goldman executive who asked not to be identified discussing internal forecasts. "We're seeing exactly the kind of moderation the Fed needs to continue with its planned easing cycle."

The firm maintains its expectation for 25 basis point cuts in both October and December 2025, with further reductions anticipated through 2026 that would bring the terminal rate to approximately 3.0%. This outlook contrasts with some market speculation that recent economic data might prompt the Fed to delay its easing plans.

Federal Reserve officials have been closely monitoring labor market conditions and inflation expectations alongside traditional CPI metrics. The central bank's dual mandate of maximum employment and price stability appears to be coming into better balance, according to Goldman's analysis.

Attempts to reach Federal Reserve spokespeople for comment were unsuccessful Thursday afternoon. Treasury yields showed little movement following the release of Goldman's assessment, suggesting markets had largely priced in the continuation of the easing cycle.

The resumption of Fed rate cuts is already influencing global bond yields lower, with similar easing policies emerging in other major economies facing comparable economic headwinds. Market participants will be watching closely for any shift in tone from Fed officials in the coming weeks.

Correction: An earlier version of this article misstated the timing of expected rate cuts. Goldman Sachs forecasts cuts in October and December 2025, not 2024.