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Goldman Sachs now expects three U.S. Fed rate cuts starting in September 2025 due to labor softness and disinflation, with wider implications for stocks, bonds, and crypto.
Author: Tanishq Bodh
August 5, 2025 – In a bold revision of its monetary outlook, Goldman Sachs now anticipates three consecutive 25 basis point rate cuts from the U.S. Federal Reserve starting this September. The move reflects rising concerns over a softening labor market and persistent disinflation trends, which may push the Fed toward a more accommodative stance.
Goldman had previously expected only one cut in 2025, but disappointing job numbers and soft inflation data changed the narrative. The July jobs report came in far below expectations, with just 114,000 new nonfarm jobs and an uptick in the unemployment rate to 4.3%.
These figures, combined with downward revisions to prior months, point to an economy losing steam—a red flag for the Fed. Meanwhile, core PCE inflation has remained tame, giving the central bank more room to ease without risking another price surge.
According to the firm’s chief economist Jan Hatzius, Goldman now sees the Fed cutting at the next three FOMC meetings:
| Meeting Month | Expected Cut | Post-Cut Rate Range |
|---|---|---|
| September 2025 | 25 bp | 4.00%–4.25% |
| October 2025 | 25 bp | 3.75%–4.00% |
| December 2025 | 25 bp | 3.50%–3.75% |
Two additional cuts in 2026 could bring the terminal rate to 3.00%–3.25%, a quarter-point lower than Goldman’s earlier forecast.
The market responded swiftly. S&P 500 futures jumped over 1%, while 10-year Treasury yields dipped below 3.8%, reflecting growing bets on easier monetary policy.
Futures markets now price in an 85% probability of a September rate cut—up from just 43% a month ago.
Crypto markets also reacted positively. With Bitcoin hovering near $120,000, analysts predict fresh liquidity could fuel a Q4 rally, especially alongside regulatory easing. On X (formerly Twitter), users shared charts, bullish memes, and slogans like “Q4 pump is coming.”
Despite the optimism, uncertainties remain. If August’s jobs report worsens, the Fed could opt for a 50 bp cut in September instead of 25. But geopolitical events, a change in administration, or surprise inflation spikes could reverse the easing trajectory.
For now, Goldman’s forecast sets the tone. As data continues to roll in, the market will be watching closely for signs that the Fed is preparing to shift from its high-rate stance.
The last time the Fed cut rates three times in a single year was in 2019, just months before the COVID-19 pandemic upended global markets and pushed rates to near-zero.
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