On January 29th, Goldman Sachs predicts that tomorrow’s Federal Reserve’s January interest rate decision will not provide any new information. The FOMC may acknowledge signs of labor market stabilization in its statement, but is unlikely to provide forward guidance for policy actions in March. It is expected that tariffs will lead to a mild, one-time increase in inflation, which the Federal Reserve may overlook. Historically, Federal Reserve officials have downplayed the inflationary impact of tariffs and focused more on the potential GDP impact. Goldman Sachs predicts that there will be two 25 basis point interest rate cuts in 2025, one in June and another in December, and another in 2026.
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