Goldman Sachs Group Inc. expects the Federal Reserve to deliver three quarter-point interest rate cuts this year, revising its outlook upward amid muted tariff effects and labor market weakness, the Wall Street brokerage said on Monday.

What Happened: The investment bank now projects three consecutive 25-basis-point cuts in September, October and December, abandoning its earlier forecast of a single reduction in December, Reuters reported. The revised projection reflects growing concerns about economic momentum despite ongoing tariff implementation.

Federal Reserve Chair Jerome Powell has cited tariff pressures as a key inflation driver, with the central bank’s median core inflation forecast rising from 2.5% in December to 3.1% currently. “That’s due to the effects of the tariffs,” Powell said during last week’s press conference.

Amazon.com Inc. CEO Andy Jassy said on Monday that the retail giant “hasn’t seen prices appreciately go up” despite widespread tariff implementation. Fundstrat Global Advisors‘ Tom Lee called Amazon a critical inflation indicator, noting the company’s massive import volume positions it to “see inflation early.”

See Also: Trump Administration Reportedly Scales Back Ambitions For Comprehensive Trade Deals Before Tariff Deadline

Why It Matters: The Fed has maintained rates at 4.25%-4.50% for four consecutive meetings while projecting two cuts in 2025. Personal Consumption Expenditures inflation is expected to reach 3.0% in 2025, up from March’s 2.7% forecast, while real GDP growth was downgraded to 1.4% from 1.7%.

Political tensions surrounding Fed independence continue mounting. Treasury Secretary Scott Bessent said on Monday he “will do what the President wants” when asked about potentially replacing Powell after his term expires in May 2026. President Donald Trump has repeatedly criticized Powell, calling him “a stupid person” for keeping rates “artificially high.”

Economist Mohamed El-Erian warned that three political narratives threaten the Fed’s “institutional integrity and operational credibility,” including speculation about a “shadow chair” appointment and internal pressure from Republican-leaning governors pushing for July rate cuts.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.