Goldman Sachs Predicts Fed and ECB Rate Cuts as Recession Risks Rise

Goldman Sachs has cut its economic growth outlook for both the U.S. and Europe due to escalating recession risks linked to President Trump’s tariff policies.

Increasing Recession Probabilities

• U.S. Recession Risk: Goldman has raised the 12-month probability of a U.S. recession from 20% to 35%.
• GDP Growth Forecast: The firm’s 2025 growth estimate is now 1.5%, down from 2.0%.
• Tariffs Impact: Trump’s tariffs could increase the average U.S. tariff by 15 percentage points, further impacting economic growth.

Predicting Rate Cuts

Goldman Sachs foresees multiple cuts in Federal Reserve rates through the latter half of 2025, signifying significant shifts in monetary policy.

Market Implications

The anticipated economic shifts indicate challenges ahead for both the U.S. and European economies, making investors wary of upcoming market conditions.