Goldman Sachs has reaffirmed its expectation for the Federal Reserve to implement two rate cuts this year, but notes that the specific timing remains subject to multiple uncertainties. Lindsey Rosner, head of multi-asset fixed income investing at the firm, pointed out that recent signs of weakness in the labor market have become an important warning signal for Fed policy making. Delaying rate cuts excessively could put unnecessary pressure on the economy.
At the same time, the continued turmoil in the Middle East, especially the potential inflationary risks brought by Iran-related dynamics, is significantly disrupting market judgment on the direction of US monetary policy. Rosner emphasized that these external shocks have temporarily masked the signals from domestic employment data, making the path to policy normalization more ambiguous.
Goldman Sachs believes that the Fed still needs to complete the remaining two rate cuts to guide interest rates to a neutral level, but in the current highly uncertain environment, it is more difficult to accurately predict the timing of rate cuts.
The latest US non-farm payroll data further confirmed the economic slowdown trend: the seasonally adjusted non-farm employment population unexpectedly decreased by 92,000 in February, the first negative since October 2025, far below the market's expected increase of 59,000. During the same period, the unemployment rate rose to 4.4%, a new high since December 2025, also higher than the market forecast of 4.3%. These data have strengthened market expectations for the Fed to shift to easing this year.