Goldman Sachs chief economist Jan Hatzius says today’s FOMC meeting delivered “no major surprises and was largely uneventful”. Fed Chair Powell said the labor market remains solid but also said six times that it faces “downside risks,” and said that inflation is most of the way back to 2%, Hatzius writes. Goldman Sachs further notes that while Powell declined to endorse expectations for a two-cut baseline in the June dot plot given two more rounds of employment and inflation data still to come, the firm continues to forecast three 25bps rate cuts this year in September, October, and December, followed by two more in 2026 to a terminal rate of 3-3.25%.
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