Goldman Sachs economists forecast more interest rate cuts this year on fears tied to Trump’s tariffs

New York Post - Mar 31st, 2025

Goldman Sachs economists have revised their forecast, now predicting that the Federal Reserve will cut interest rates three times this year, in response to President Donald Trump's escalating tariff plans. The Wall Street firm's updated forecast, led by Jan Hatzius, anticipates rate reductions in July, September, and November, up from their previous expectation of two cuts. This change reflects increased concerns that the tariffs, which include new levies on foreign auto imports, will hinder economic growth. As a result, Goldman has also adjusted its predictions for US economic indicators, projecting higher core PCE inflation and a lower GDP growth rate in 2025. The announcement comes after the Fed decided to keep rates unchanged, despite warning of potential economic slowdown and inflationary pressures.

The implications of Trump's tariff strategy extend beyond the US, with Goldman also lowering its growth forecasts for the EU, anticipating retaliatory actions from foreign leaders. The tariffs are expected to drive inflation as producers pass on costs to consumers, potentially leading to recessionary pressures. Markets reacted negatively to the developments, with the S&P 500 and Nasdaq 100 experiencing declines. The broader economic impact emphasizes the need for what Goldman terms 'insurance' rate cuts to mitigate risks. The ongoing trade tensions, coupled with the potential for increased unemployment, highlight the significant economic and political stakes involved in the current US trade policy.

Donald Trump Federal Reserve Inflation Tariffs Unemployment Goldman Sachs Economic Growth Interest Rate Cuts

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RATING

5.8

Moderately Fair

Read with skepticism

The story provides a timely and relevant examination of economic forecasts and policy decisions, focusing on Goldman Sachs' predictions and the potential impacts of tariffs. While the article is generally clear and accessible, it would benefit from greater source transparency and a broader range of perspectives to enhance its accuracy and balance. The lack of direct citations or links to official reports weakens the source quality, and the limited diversity of viewpoints may lead to an imbalanced presentation. Despite these weaknesses, the article addresses topics of significant public interest and has the potential to influence discussions about economic policy. Enhancing transparency and including more diverse perspectives would improve the overall quality and impact of the story.

Accuracy

The story presents several claims that are generally aligned with economic forecasts and current events, such as Goldman Sachs' prediction of multiple interest rate cuts due to tariff concerns. However, the article lacks direct citations or links to Goldman Sachs' official reports or statements, which would strengthen its accuracy. The claim that tariffs will increase by 15 percentage points and the specific timing of the Federal Reserve's rate cuts (July, September, and November) are crucial details that require verification through credible sources. Additionally, the mention of Trump's tariff plans and their potential impact on markets is consistent with known economic narratives, but again, lacks direct sourcing.

Balance

The article primarily presents the perspective of Goldman Sachs and the potential economic impacts of Trump's tariffs, focusing on the negative consequences such as slowed economic growth and increased inflation. While it does mention some of Trump's statements, it lacks a broader range of viewpoints, such as those from other economists, policymakers, or industry representatives who might offer differing opinions on the tariffs' impact or the Fed's actions. This narrow focus may lead to an imbalanced view of the situation, as it does not fully explore the potential benefits or alternative interpretations of the tariffs and economic forecasts.

Clarity

The article is generally clear and concise, with a logical flow of information that makes it easy to follow the main points. It effectively outlines the potential economic impacts of tariffs and interest rate cuts, providing a coherent narrative. However, some sections could benefit from more detailed explanations, particularly regarding the economic mechanisms behind the forecasts and the specific impacts of tariffs on different sectors. Simplifying complex economic terms and providing more context could enhance overall comprehension for a general audience.

Source quality

The article refers to Goldman Sachs and its economists as primary sources, which are credible and authoritative in the field of economic forecasting. However, the lack of direct quotes, links, or citations to Goldman Sachs' reports or statements weakens the source quality. The article also mentions statements from President Trump but does not provide direct quotes or sources for these claims, which could affect the reliability of the information presented. Including a wider variety of sources, such as other economic analysts or official government statements, would enhance the credibility and depth of the reporting.

Transparency

The article provides limited context and explanation of its claims, particularly in terms of methodology and sources. It does not clearly disclose how Goldman Sachs arrived at its forecasts or the specific data or models used. Additionally, the article does not address any potential conflicts of interest or biases that could affect the interpretation of the data and forecasts. Greater transparency in these areas would improve the article's credibility and allow readers to better understand the basis for the claims made.