Goldman Sachs CEO: Fed Unlikely to Cut Rates Before September

Goldman Sachs CEO David Solomon expects the Federal Reserve to delay any emergency rate cuts until at least September despite weak job data, believing the U.S. economy will avoid a recession. Speaking on “The David Rubenstein Show,” Solomon indicated that while investors had anticipated potential rate cuts before the September meeting due to global market turmoil and disappointing employment figures, these expectations have now diminished. Derivative markets had reflected a 60% probability of imminent cuts but now foresee rate reductions at the Sept. 18 meeting. Solomon acknowledged recent market volatility triggered by Japan’s rate hikes and the unwinding of carry trades, which could continue given the yen’s undervaluation. Although the job report was softer than expected, Solomon emphasized it wasn’t disastrous. He highlighted the market’s overly optimistic rate cut expectations and noted Goldman’s increased recession probability to 25% from 15%. Solomon views the current market correction as potentially beneficial, expecting short-term volatility.