Goldman Sachs CFO predicts that the U.S. will experience a soft landing due to the Fed's decision to cut interest rates.

Goldman Sachs CFO predicts that the U.S. will experience a soft landing due to the Fed's decision to cut interest rates.
Goldman Sachs CFO predicts that the U.S. will experience a soft landing due to the Fed's decision to cut interest rates.
  • According to Goldman Sachs' chief financial officer, the Federal Reserve's decision to decrease interest rates by 50 basis points will lead the U.S. economy towards a gentle slowdown.
  • Market participants are questioning whether the U.S. central bank's jumbo rate cut was timely in reducing inflation without causing a recession.
  • Some individuals doubt the U.S. economy's strength in the upcoming months.

According to the chief financial officer, the Federal Reserve's decision to lower interest rates by 50 basis points will lead the U.S. economy towards a soft landing.

Market participants are questioning whether the U.S. central bank's jumbo rate cut was timely in reducing inflation without causing a recession.

Concerns about the U.S. economy have been raised by some analysts, who warn that large rate cuts may not prevent future recessions, as seen in the early 2000s and the global financial crisis.

The Federal Open Market Committee unexpectedly decided to lower its benchmark overnight borrowing rate by 0.5 percentage points to a range of 4.75% to 5%, with one basis point equal to 0.01%.

Since the early days of the coronavirus pandemic, the FOMC had not cut by as much as it did on this occasion. Prior to that, the global financial crisis in 2008 was the last time the FOMC made such a significant reduction.

U.S. on track for a soft landing after Fed’s jumbo interest rate cut, Goldman CFO says

According to Denis Coleman, chief financial officer at Goldman Sachs, the first 50 basis point cut is a clear indication of the new direction and should unlock incremental amounts of confidence, reduce cost of capital, and enable more strategic activity before the end of the year.

"By 2025, we hope to reduce backlogs and increase activity in the markets," he stated.

Coleman expressed hope and expectation that the Fed's rate cut would secure a soft landing for the U.S. economy.

"Coleman stated that managing economies through transition is always challenging, but currently, inflation levels are decreasing, unemployment is under control, and they are implementing rate cuts to maintain a soft-landing trajectory."

Dimon: 'Put me on the cautious side'

Some individuals doubt that the U.S. economy will remain strong in the upcoming months.

JPMorgan Chase CEO Jamie Dimon stated in an interview with CNBC-TV18 that while he is a long-term optimist, he is more skeptical than others about the short-term success of everything being great.

"While markets are pricing things as if they will perform well, I prefer to remain cautious," he stated.

— CNBC's Jeff Cox contributed to this report.

by Sam Meredith

Markets