Goldman Sachs Orders Two Rate Cuts, Fed Says 'It'll Be Ready in 30 Minutes... or 30 Months'

Goldman Sachs still expects the Federal Reserve to deliver rate cuts this year, but suggests the central bank might serve them like a restaurant running on 'kitchen time.'

Chief US economist David Mericle stated the firm has pushed back its forecast for cuts to September and December. The Fed appears to be balancing stubborn inflation pressures against early signs of a labor market that's starting to look a bit tired.

Despite the labor market showing hints of cooling, Mericle described the central bank as 'stubborn,' a trait crypto degens might recognize from their own portfolios. He noted that while inflation remains a concern, a gradual cooling in jobs data could still give the Fed room to ease policy later in 2026.

This projection follows spicy statements from Chicago Fed President Austan Goolsbee, who suggested the Fed might actually hike interest rates if inflation rises—a plot twist nobody in the markets ordered.

Goldman Sachs points to ongoing global tensions as a major reason for potential delays. Mericle believes disruption of oil supply via the Strait of Hormuz could be prolonged, further pushing back rate reductions like a transaction stuck in a mempool.

As Middle East tensions escalate and oil prices rally, higher energy costs could complicate the Fed's task by pushing inflation higher and affecting global economic growth, adding more volatility than a shitcoin's chart.

Mericle specifically highlighted the US-Iran war as putting the Federal Reserve in a 'complicated situation.' With no clear end in sight, the Fed's path remains uncertain, much like trying to predict the next narrative cycle.

The Fed recently held interest rates unchanged at 3.50%-3.75%, a widely anticipated move. Markets are now even pricing in the possibility of rate hikes, which is the financial equivalent of expecting a rug pull.

Before the conflict, Fed officials were divided—some worried about a slowing job market, while others wanted to wait until inflation moved closer to the 2% target. The ongoing war has increased both inflation and growth risks, making the Fed's dashboard look like a DeFi interface after a hack.

Despite the complications, Goldman Sachs maintains an expectation for two rate cuts in 2026. A modest labor market slowdown and relatively stable underlying inflation could provide enough reason for the Fed to ease policy, perhaps as a 'thank you' for the patience.

The Fed funds rate is expected to gradually move toward a more neutral range of around 3% to 3.25%, which in central bank terms is basically 'sideways consolidation.'