The Federal Reserve stays vigilant. According to Goldman Sachs forecasts, the Federal Reserve is expected to cut the funds rate by 25 basis points in March 2025.

On January 3, Goldman Sachs experts unveiled their forecast of the Federal Reserve’s rate cuts for 2025. The nearest rate cut is anticipated in March. This round of monetary easing will be followed by two more cuts of the same size in June and September.

The odds are that the Federal Reserve will lower the key interest rate by 25 basis points in March, followed by two consequent 25-basis-point rate cuts in June and September. Ultimately, the target range will be 3.5%–3.75%, the bank noted.

Besides, Goldman Sachs analysts expect the US central bank to scale down balance sheet growth in January and completely halt it by the second quarter of 2025. Regarding real US GDP, the bank projects it to grow by 2.4% in 2025 on year, driven by a steady rise in household income and less severe financial conditions.

Goldman Sachs also predicts that the core Personal Consumption Expenditures (PCE) inflation will slow to 2.4% by the end of 2025, aided by sliding US housing prices and fading wage pressure. As for the tariffs promised by President-elect Donald Trump, they are expected to have a moderate inflationary impact.

According to experts, the US unemployment rate will gradually decline, reaching 4.0% by the end of 2025, indicating the resilience of the US labor market.

In addition, Goldman Sachs anticipates global economic growth of 2.7% on year in 2025, driven by easing financial conditions and increased disposable incomes.

However, there is a fly in the ointment. The optimistic outlook is overshadowed by risks arising from geopolitical events, such as changes in US tariff policy, immigration issues, and new tax cuts by Trump’s administration.

The eurozone is also vulnerable to some headwinds. Goldman Sachs expects the European Central Bank to go ahead with further rate cuts until mid-2025. Besides, experts warn that China’s economy could lose momentum with its GDP growth declining to 4.5% due to internal challenges.