Goldman Sachs analyst: maintain the view that the Federal Reserve cut interest rates for the first time in July

Federal Reserve Governor Paul Waller had a busy day on Tuesday. Before markets opened, he cast doubt on the July rate cut, saying he needed to see "several months of good inflation data" before considering a rate cut. That's not good news for those still holding out hope for a July rate cut. "There are only two months of inflation data between now and the July meeting, and the threshold of'several months of data 'suggests that inflation alone will drive a rate cut is quite high," wrote Goldman Sachs chief economist Jan Hatzius and his team. But analysts have not changed their basic view that the first rate cut will come in July, with a total of two cuts in 2024. "For starters, Waller's views may not be representative of the FOMC as a whole," they wrote. "In addition, labor market data have slowed in recent months and further softening in the coming months, combined with a modest improvement in inflation data, should convince the FOMC to begin policy normalization earlier than Waller's schedule."