Goldman Sachs Predicts Fed Rate Cuts Starting September 2025

Central Bank

Economic

Summary:

Goldman Sachs anticipates the Federal Reserve will initiate three 25 basis point interest rate cuts from September, potentially increasing to 50 basis points if unemployment rises.

Key Points:

● Goldman Sachs anticipates Federal Reserve interest rate cuts from September 2025.

● Cryptocurrencies may be positively influenced by dollar weakness.

● Market reactions are centered around U.S. economic data reliability.

Goldman Sachs anticipates the Federal Reserve will initiate three 25 basis point interest rate cuts from September, potentially increasing to 50 basis points if unemployment rises.

The forecast by Goldman Sachs affects market sentiment, weakening the U.S. dollar and potentially boosting cryptocurrencies like Bitcoin and Ethereum as investors adjust their positions.

Goldman Sachs Eyes September 2025 for Fed Rate Cuts

Goldman Sachs, through its Chief U.S. Economist David Mericle, anticipates that the Federal Reserve will initiate a series of interest rate reductions beginning in September 2025. These reductions could involve three 25 basis point cuts. Speculation grows around a possible 50 basis point cut if unemployment increases significantly.

Immediate market impacts include a weakening U.S. dollar, which could enhance cryptocurrency valuations as these assets typically gain strength when fiat currencies decline. This expectation has heightened market sensitivity towards forthcoming economic indicators.

"Estimates the odds of a September cut are 'somewhat above' 50%, with 25 basis point cuts pencilled in for the coming meetings..."

Community reactions, primarily within financial and crypto circles, revolve around the reliability of U.S. economic data assessments. Concerns arise due to recent changes within the Bureau of Labor Statistics, impacting how market participants view potential financial outcomes.

Crypto Market Set to Benefit from Dollar Weakness

Did you know? In past instances, when the Federal Reserve signaled rate cuts, both equities and major cryptocurrencies such as BTC and ETH experienced upticks, highlighting investor optimism towards risk assets during easing cycles.

Bitcoin (BTC) currently trades at $114,708.40 with a market capitalization of 2,282,917,205,331 and a market dominance of 60.78%. Recent data shows a 20.97% increase over the last 90 days. Trading volumes hit 54,982,641,934 in a 24-hour span, reflecting volatile market sentiment.

Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 20:28 UTC on August 4, 2025.

Expert suggests that forthcoming rate adjustments could further stimulate investor interest in digital assets, yet market players remain cautious over the evolving regulatory landscape and economic data integrity. Continued vigilance on macroeconomic shifts remains critical for stakeholders.

Source: CryptoSlate

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Daniel Carter

Economic

Central Bank

The pace of consumer inflation in South Korea slowed, giving the central bank added incentive to resume its rate-cut cycle as the trade-reliant economy braces for the impact from higher US tariffs.

Consumer prices rose 2.1% in July from a year earlier, slowing from a 2.2% clip in June, the statistics office reported Tuesday. The result matched consensus estimates of economists surveyed by Bloomberg.

A gauge of prices that excludes food and energy rose 2% in July, the same as in June, according to Statistics Korea.

The softer figures come just days after the US agreed last week to assess 15% tariffs on most Korean imports. The last-minute deal helped South Korea avoid the worst-case scenario of 25% import levies that President Donald Trump had threatened, but it still represents an increase of across-the-board tariffs from 10% in recent months. Annual exports are equivalent to more than 40% of the country's gross domestic product.

The central bank's board next sets policy on Aug. 28, after having paused its rate-cut cycle in June and July, and some economists forecast a quarter-point reduction this month. At its July meeting, the board noted it must weigh the case for shielding the economy from the effects of US tariffs, while also attempting to forestall a further rally in housing prices in the capital that risks spurring debt levels.

Governor Rhee Chang Yong has recently highlighted the BOK's commitment to maintaining economic stability amid external shocks, while cautioning that excessive stimulus could fuel real estate speculation and add to the country's already high household debt load.

The housing market stayed hot last month, but the pace of price increases continued to ease — a development that offered relief to policymakers trying to stabilize costs of living. Apartment prices in Seoul slowed to 0.12% gain in the week of July 28, which was less than half the recent peak of 0.43% set in June, according to data from the Korea Real Estate Board.

The won's advance in recent months has also made it easier for authorities to consider looser policy settings, with the currency among the biggest gainers against the dollar this year.

Prices of food and non-alcoholic beverages rose 3.5% from a year earlier in July, while transportation costs slipped 0.2%. Education prices gained 2.6%. Housing, water, electricity and fuel costs climbed 1.8%. Prices for food and lodging gained 3.2%.

Source: Bloomberg Europe

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Manuel

Economic

The monthly jobs report is already closely-watched on Wall Street and in Washington but has taken on a new importance after President Donald Trump on Friday fired the official who oversees it.

Trump claimed that June's employment figures were “RIGGED” to make him and other Republicans “look bad.” Yet he provided no evidence and even the official Trump had appointed in his first term to oversee the report, William Beach, condemned the firing of Erika McEntarfer, the director of the Bureau of Labor Statistics appointed by former President Joe Biden. The firing followed Friday's jobs report that showed hiring was weak in July and had come to nearly a standstill in May and June, right after Trump rolled out sweeping tariffs.

Economists and Wall Street investors have long considered the job figures reliable, with share prices and bond yields often reacting sharply when they are released. Yet Friday’s revisions were unusually large — the largest, outside of a recession, in five decades. And the surveys used to compile the report are facing challenges from declining response rates, particularly since COVID, as fewer companies complete the surveys.

Nonetheless, that hasn't led most economists to doubt them.

“The bottom line for me is, I wouldn’t take the low collection rate as any evidence that the numbers are less reliable,” Omair Sharif, founder and chief economist at Inflation Insights, a consulting firm, said.

Many academics, statisticians and economists have warned for some time that declining budgets were straining the government's ability to gather economic data. There were several government commissions studying ways to improve things like survey response rates, but the Trump administration disbanded them earlier this year.

Heather Boushey, a top economic adviser in the Biden White House, noted that without Trump's firing of McEntarfer, there would be more focus on last week's data, which points to a slowing economy.

“We’re having this conversation about made-up issues to distract us from what the data is showing," Boushey said. “Revisions of this magnitude in a negative direction may indicate bad things to come for the labor market.”

Here are some things to know about the jobs report:

Economists and Wall Street trust the data

Most economists say that the Bureau of Labor Statistics is a nonpolitical agency staffed by people obsessed with getting the numbers right. The only political appointee is the commissioner, who doesn't see the data until it's finalized, two days before it is issued to the public.

Erica Groshen, the BLS commissioner from 2013 to 2017, said she suggested different language in the report to "liven it up", but was shot down. She was told that if asked to describe a cup as half-empty or half-full, BLS says “it is an eight ounce cup with four ounces of liquid.”

The revised jobs data that has attracted Trump's ire is actually more in line with other figures than before the revision. For example, payroll processor ADP uses data from its millions of clients to calculate its own jobs report, and it showed a sharp hiring slowdown in May and June that is closer to the revised BLS data.

Trump and his White House have a long track record of celebrating the jobs numbers — when they are good.

These are the figures is Trump attacking

Trump has focused on the revisions to the May and June data, which on Friday were revised lower, with job gains in May reduced to 19,000 from 144,000, and for June to just 14,000 from 147,000. Every month's jobs data is revised in the following two months.

Trump also repeated a largely inaccurate attack from the campaign about an annual revision last August, which reduced total employment in the United States by 818,000, or about 0.5%. The government also revises employment figures every year.

Trump charged the annual revision was released before the 2024 presidential election to “boost” Vice President Kamala Harris's "chances of Victory," yet it was two months before the election and widely reported at the time that the revision lowered hiring during the Biden-Harris administration and pointed to a weaker economy.

Here's why the government revises the data

The monthly revisions occur because many companies that respond to the government's surveys send their data in late, or correct the figures they've already submitted. The proportion of companies sending in their data later has risen in the past decade.

Every year, the BLS does an additional revision based on actual job counts that are derived from state unemployment insurance records. Those figures cover 95% of U.S. businesses and aren't derived from a survey but are not available in real time.

These are the factors that cause revisions

Figuring out how many new jobs have been added or lost each month is more complicated than it may sound. For example, if one person takes a second job, should you focus on the number of jobs, which has increased, or the number of employed people, which hasn't? (The government measures both: The unemployment rate is based on how many people either have or don't have jobs, while the number of jobs added or lost is counted separately).

Each month, the government surveys about 121,000 businesses and government agencies at over 630,000 locations — including multiple locations for the same business — covering about one-third of all workers.

Still, the government also has to make estimates: What if a company goes out of business? It likely won't fill out any forms showing the jobs lost. And what about new businesses? They can take a while to get on the government's radar.

The BLS seeks to capture these trends by estimating their impact on employment. Those estimates can be wrong, of course, until they are fixed by the annual revisions.

The revisions are often larger around turning points in the economy. For example, when the economy is growing, there may be more startups than the government expects, so revisions will be higher. If the economy is slowing or slipping into a recession, the revisions may be larger on the downside.

Here's why the May and June revisions may have been so large

Ernie Tedeschi, an economic adviser to the Biden administration, points to the current dynamics of the labor market: Both hiring and firing have sharply declined, and fewer Americans are quitting their jobs to take other work. As a result, most of the job gains or losses each month are probably occurring at new companies, or those going out of business.

And those are the ones the government uses models to estimate, which can make them more volatile.

Groshen also points out that since the pandemic there has been a surge of new start-up companies, after many Americans lost their jobs or sought more independence. Yet they may not have created as many jobs as startups did pre-COVID, which throws off the government’s models.

Revisions seem to be getting bigger

The revisions to May and June's job totals, which reduced hiring by a total of 258,000, were the largest — outside recessions — since 1967, according to economists at Goldman Sachs.

Kevin Hassett, Trump's top economic adviser, went on NBC's “Meet the Press” on Sunday and said, “What we’ve seen over the last few years is massive revisions to the jobs numbers.”

Hassett blamed a sharp drop in response rates to the government's surveys during and after the pandemic: “When COVID happened, because response rates went down a lot, then revision rates skyrocketed.”

Yet calculations by Tedeschi show that while revisions spiked after the pandemic, they have since declined and are much smaller than in the 1960s and 1970s.

Other concerns about the government's data

Many economists and statisticians have sounded the alarm about things like declining response rates for years. A decade ago, about 60% of companies surveyed by BLS responded. Now, only about 40% do.

The decline has been an international phenomenon, particularly since COVID. The United Kingdom has even suspended publication of an official unemployment rate because of falling responses.

And earlier this year the BLS said that it was cutting back on its collection of inflation data because of the Trump administration's hiring freeze, raising concerns about the robustness of price data just as economists are trying to gauge the impact of tariffs on inflation.

U.S. government statistical agencies have seen an inflation-adjusted 16% drop in funding since 2009, according to a July report from the American Statistical Association.

“We are at an inflection point,” the report said. “To meet current and future challenges requires thoughtful, well-planned investment ... In contrast, what we have observed is uncoordinated and unplanned reductions with no visible plan for the future.

Source: AP

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Manuel

Commodity

Political

Copper rose as traders continued to digest US President Donald Trump’s decision to spare the most traded form of the metal from his 50% tariff, while a deadly mine accident in Chile raised supply concerns.

Copper trading conditions started to settle on the London Metal Exchange, after the White House’s shock move last week to exclude refined metal from the newly imposed import levy. The decision sent US prices plunging by a record 22% on Thursday, pushing them back to parity with the LME’s global benchmark.

A key question now is what will happen to the huge volume of copper that’s been shipped to the US in anticipation of tariffs, with the spreads between prices in London, New York and Shanghai likely to determine whether the metal flows back out quickly or remains in US ports. On Monday, US copper futures on CME Group’s Comex were trading about 1.8% — or $176 a ton — above those on the LME, undercutting the immediate rationale for exports.

“In the past, metal flowed between the CME and LME whenever the spread between those two prices moved outside a $100-200/t band,” Bank of America analysts led by Irina Shaorshadze said in an emailed note. “As the trade flows normalize, the LME-CME spread should revert to the historical mean-reverting relationship.”

Copper traders are also on alert for supply disruptions, after six people were killed in a tunnel collapse triggered by an earth tremor last week at El Teniente, which accounts for over a quarter of Chilean mining giant Codelco’s output. Underground operations are halted and — with the company launching an investigation into the causes — it’s unclear how long the stoppage will last or whether it will trigger changes to Codelco’s output goals.

El Teniente, one of the world’s biggest underground mines, produced 356,000 tons of copper last year. That volume is equivalent to more than a month of Chinese imports of refined copper.

The stoppage at El Teniente comes as the world’s copper smelters face intense competition to secure mine supply. Treatment fees — typically the main earner for smelters — remain at deeply negative levels on a spot basis, and plants in the Philippines and Japan have cut output or closed. Even in China, where output has remained robust, there is some speculation that production is reaching a limit.

Investors are also monitoring other unexpected mine disruptions, including at the massive Kamoa-Kakula complex run by Ivanhoe Mines Ltd. in the Democratic Republic of Congo. Still, Ivanhoe executives on Friday delivered an upbeat assessment on prospects for returning that mine to previous output guidance.

LME copper prices rose 0.6% to settle at $9,687.00 a ton at 5:53 p.m. local time. Other metals were mixed, with zinc up 0.8% and aluminum down 0.5%.

Source: Bloomberg

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Manuel

Cryptocurrency

Spot Ethereum exchange-traded funds (ETFs) available in the US saw $152.3 million in outflows on Aug. 1, ending their longest streak of inflows.

According to Farside Investors’ data, the outflow amount was the largest since Jan. 8. It ended the 20-day streak of positive netflows for Ethereum ETFs, which have accumulated nearly $5.4 billion during the period.

The ended streak is not only the largest in duration, but also in total amount of inflows and average daily flow, which was approximately $270 million.

The previous record in duration was 19 days straight, which ended on June 13 and resulted in roughly $1.4 billion captured, with an average of $73 million per day.

However, it was largely eclipsed by the 18-day record that ended on December 19 and inched close to $2.5 billion, resulting in nearly $139 million per day on average.

James Butterfill, head of research at CoinShares, pointed out macroeconomic events as the likely causes for August 1 outflows. He noted last week’s statements by the Federal Open Market Committee (FOMC) and the strong economic data.

ETHA levels up

Until June 30, Ethereum ETFs registered around $4.3 billion in inflows. By adding close to $5.4 billion in positive net flows last month, Ethereum ETFs increased their flows by 126%.

BlackRock’s ETHA was the main reason behind the growth of Ethereum ETFs. As reported by Bloomberg senior ETF analyst Eric Balchunas, ETHA was the third-largest ETF by inflows in July, registering close to $4.2 billion and representing 78% of the total.

BlackRock’s Bitcoin ETF, IBIT, and Vanguard S&P 500 ETF (VOO) were the two funds besting ETHA.

Usually, Balchunas calls the high flows into VOO and IBIT as “beta with a side of Bitcoin.” Yet, he highlighted on August 4:

“Top 3 ETFs (out of 4,432) in one month flows: $VOO, $IBIT, $ETHA. I used to say ‘Beta with a side of Bitcoin’ to describe this (which was most of 2024 leaderboard) but need a new phrase, ideally an aliteration, to incl Ether. If you think of anything i’m all ears.”

As of August 1, ETHA shows over $9.7 billion in cumulative flows.

Source: Cryptoslate

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Manuel

Commodity

Energy

Oil prices fell in choppy trading as traders took stock of OPEC+’s latest bumper supply increase while US President Donald Trump stepped up threats to penalize India for buying Russian crude, raising fears of tightening global supplies.

West Texas Intermediate crude traded close to $66 a barrel after Trump’s renewed warnings of tariffs on India over purchases of Russian oil. The latest fluctuation came after oil prices hit the lowest in a week as OPEC+ endorsed an additional 547,000 barrels-a-day of output for next month.

“We still have this looming deadline for Russia to come to the table for a ceasefire with Ukraine,” said Frank Monkam, head of macro trading at Buffalo Bayou Commodities. Trump’s reiteration of possible tariffs on India for buying Russian oil “reminded the market that this whole thing is still in limbo.”

US Special Envoy Steve Witkoff is expected to visit Russia on Wednesday, Tass reported, citing people familiar with the plans. Some investors — already wary of Trump’s habit of threatening economic penalties just to reverse course days later — see the development as a clue that an agreement between Washington and Moscow may be reached before any significant penalties come to pass.

Still, the impact of any potential measures is uncertain. “The oil market is still assigning a low probability to anything meaningful from the White House as it relates to Russian oil exports,” said Pavel Molchanov, an analyst at Raymond James. “The only way to zero out Russian oil exports would be to implement a full-fledged naval blockade of the Russian coastline, which no one is seriously considering.”

Earlier in the session, Indian Prime Minister Narendra Modi struck a defiant tone in the face of Trump’s threats, signaling his country would continue to buy Russian oil. That walked back earlier gains on signs of dropping refinery run rates in the Asian country as a result of Trump’s threats against Moscow, which had stoked fears of tightness in refined-product markets.

Crude is coming off three months of gains. Prices had slumped Friday as soft US jobs data raised concern the world’s largest economy was slowing following the Trump administration’s wave of trade tariffs. While global crude stockpiles grew early in the year, much of the increase has been in China, far away from the market’s vital pricing points.

The September output hike announced by OPEC+ over the weekend stands to complete the reversal of a cutback made in 2023 by an eight-member sub-group in the alliance that includes Saudi Arabia and Russia. The progressive restoration of supplies over recent months has been widely seen as a concerted push by the cartel to reclaim market share. It’s uncertain whether additional curtailed output will be restored in the coming months, or the group will now stand pat.

The latest increase may reinforce speculation that global crude supplies will run ahead of demand into the end of the year, lifting commercial stockpiles, compressing key market timespreads, and setting the scene for a selloff.

Source: Bloomberg

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Adam

Economic

It took only a few days for the Federal Reserve’s latest decision on interest rates to age like milk.

The central bank on Wednesday said it was holding borrowing costs steady yet again, extending a wait-and-see pattern that began in January. That same day, Fed Chair Jerome Powell told reporters that a “solid” labor market means central bankers still have the luxury of waiting to see how President Donald Trump’s tariffs affect prices before resuming rate cuts that could help boost jobs but could also reignite inflation.

Just two days later, it turned out that the job market is on shakier ground than Powell had suggested. It may take a bit more time to know if that’s really the case.

But the Fed may walk away with egg on its face.

On Friday, the Labor Department reported that employers added just 73,000 jobs in July, well below the threshold of monthly job growth necessary to keep up with population growth. Meanwhile, the unemployment rate ticked up to 4.2% from 4.1%.

And the monthly report was even worse than it seems: The Labor Department also massively revised downward the job gains for the prior two months.

It’s now clear that job growth has been anemic, based on the newly revised data: The average pace of monthly job growth from May through July was the weakest than any other three-month period since 2009, outside of the pandemic recession in 2020.

The Fed declined CNN’s request for comment.

“Powell is going to regret holding rates steady this week,” Jamie Cox, managing partner at Harris Financial Group, said in commentary issued Friday.

But not everyone at the Fed shared Powell’s view on the labor market. The Fed’s latest decision generated pushback from within like it hasn’t seen in decades.

Fed Governor Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman cast dissenting votes, marking the first time that more than one Fed governor has done so since 1993.

In statements issued Friday, both officials pointed to signs of weakness in labor market as a major reason why they dissented, while downplaying the potential effects of Trump’s tariffs on prices. The Fed is tasked by Congress to address both high inflation and a weakening labor market.

“The labor market has become less dynamic and shows increasing signs of fragility,” Bowman wrote, adding that just few industries have propelled job growth this year, which remained the case in July, according to the latest data.

Still, it may be too soon to conclude that the Fed has royally screwed up.

“It was a disappointing report to be sure, but when I look at the data, we try not to make too much out of any one individual report,” Cleveland Fed President Beth Hammack told Bloomberg on Friday after the July jobs report was released. “I feel confident with the decision we made earlier this week.”

Last year, after the unemployment rate climbed quickly in a short period of time and there were similar calls that the central bank was too late to lower rates, the Fed stepped in with a bold, half-point rate cut to stave off any further weakening.

By the end of last year, it turned out that the labor market wasn’t falling off a cliff: In December, employers added a massive 323,000 jobs as the unemployment rate edged down from the prior month to 4.1%.