Future of Interest Rates

NEW YORK (Reuters) – The Federal Reserve’s future moves on interest rates in 2025 will be in a narrow range unless the trajectory of inflation changes, Goldman Sachs CEO David Solomon stated in comments published on the firm’s website on Wednesday.

> “Unless we get some policy action that really changes the trajectory of inflation, I think we’ll be in a narrow band with the policy rate,” Solomon said during the firm’s podcast.

The U.S. central bank held interest rates steady on Wednesday, with Federal Reserve Chair Jerome Powell mentioning there would be no rush to cut them again until inflation and jobs data indicate it is appropriate.

Solomon pointed out that durable goods have shown weakness regarding the inflation rate, while services and food are currently significant headwinds.

> “Those things ultimately matter and filter through into the economy,” he remarked. “As you look out through 2025, I think the range of outcomes is a pretty narrow position on policy.”

Additionally, Solomon expressed optimism for a significantly improved environment for capital markets activity in 2025, anticipating increased deals involving private equity firms.

Goldman Sachs surpassed Wall Street estimates for fourth-quarter earnings, achieving its largest quarterly profit in over three years, driven by strong deal fees from its investment bankers and advantages from active markets.