Goldman Sachs "Fed Expected to Cut Benchmark Interest Rate by 0.5% Point This Month"

[Asia Economy Reporter Jeong Hyunjin] Global investment bank Goldman Sachs has forecasted that the U.S. Federal Reserve (Fed) will lower the benchmark interest rate by 0.50 percentage points this month due to concerns over the economic impact caused by the spread of the novel coronavirus (COVID-19).

According to Bloomberg on the 1st (local time), Goldman Sachs economist Jan Hatzius stated in an investor note that the Fed is expected to start by cutting the benchmark interest rate by 0.50 percentage points at the Federal Open Market Committee (FOMC) meeting scheduled for the 17th-18th of this month or just before the meeting, and lower it by a total of 1.0 percentage point within the year.

Goldman Sachs had recently anticipated that the Fed would reduce the benchmark interest rate by 0.25 percentage points at this month’s FOMC meeting and by 0.75 percentage points within the year. However, it appears that the forecast was revised to reflect Fed Chair Jerome Powell’s recent response to the COVID-19 impact. Chair Powell indicated the possibility of a rate cut in an emergency statement on the 28th of last month, saying, "We will act appropriately to support the economy and use our tools."

Economist Hatzius explained, "Chair Powell’s statement shows that global central banks are paying attention to the downside risks caused by COVID-19."

In addition to the Fed, Goldman Sachs expects the Bank of Canada to lower its benchmark interest rate by a total of 1.0 percentage point this year, while South Korea, India, the United Kingdom, and Australia are each expected to cut by 0.50 percentage points, and the European Central Bank (ECB) and the Swiss National Bank are expected to reduce rates by 0.10 percentage points each.

This content was produced with the assistance of AI translation services.