Goldman, Citigroup Predict 3 Rate Cuts By Year-end

The U.S. Federal Reserve could initiate a major shift as early as September 2025 with a first reduction in its key interest rates. Several large banks, including Goldman Sachs, Citigroup, and Wells Fargo, now consider this scenario, reshaping the outlook for financial markets. For crypto investors, who have faced a restrictive monetary environment for months, this expected pivot could rekindle risk appetite and act as a catalyst for a new bullish cycle.

In brief

• The U.S. Federal Reserve may begin cutting rates starting September 2025.
• Goldman Sachs, Citigroup, and Wells Fargo anticipate three rate cuts totaling 75 basis points by year-end.
• Rate cuts typically boost liquidity, weaken the dollar, and favor investment in risky assets like cryptocurrencies.
• JPMorgan and Morgan Stanley adopt a more cautious view, expecting fewer or no cuts this year.

Goldman Sachs, Citigroup, and Wells Fargo Bet on Rate Cuts Starting September

Despite the Federal Reserve's recent resistance to lowering rates, Goldman Sachs, Citigroup, and Wells Fargo project a cycle of three successive rate cuts beginning in September 2025. This would total a 75 basis point reduction by the end of the year. These banks base their outlook on the need to address economic slowdown and stimulate private investment. They believe monetary policy adjustments are necessary to prevent excessive weakening of growth. This anticipated easing could reignite investor interest in riskier assets, especially cryptocurrencies, which are sensitive to liquidity conditions. Key economic mechanisms supporting this outlook include:
• Lower interest rates facilitate credit access, encouraging investment in speculative assets such as Bitcoin.
• Rate cuts tend to weaken the U.S. dollar, making assets denominated in other currencies or uncorrelated with traditional monetary systems more attractive.
• Monetary easing increases investor risk-taking, driving demand for higher-yielding, non-traditional asset classes like cryptocurrencies.
• Historically, rate cut cycles have often coincided with bullish phases in the crypto market, particularly during periods of strong liquidity.
If realized, this shift could mark a turning point after a prolonged period of monetary tightening that has weighed heavily on markets.

Increased Caution from JPMorgan and Morgan Stanley

In contrast, JPMorgan and Morgan Stanley maintain a more cautious stance regarding rate cuts.
• JPMorgan forecasts a single 25 basis point cut, but only in December 2025, three months after the projections of its competitors.
• Morgan Stanley does not expect any rate reductions this year, citing ongoing economic uncertainty and inflation risks.
This divergence highlights the complexity of macroeconomic forecasting and the difficulty in predicting the Federal Reserve's exact timeline. The Fed's decision to hold rates after its July meeting, with Chairman Jerome Powell expressing concerns about slowing growth but not ruling out further tightening, adds to market uncertainty. This mixed messaging has slowed momentum in the crypto market, already dampened by global uncertainties. Additional factors, such as potential new tariffs from Donald Trump's trade policies, could further impact the U.S. economy and influence Fed decisions. Currently, Bitcoin is consolidating around $114,000, reflecting investor caution. The prospect of rate cuts is a potential bullish factor, while continued rate hikes or holds could trigger further market corrections.

---

Frequently Asked Questions (FAQ)

Impact of Rate Cuts on Crypto

Q: How do Federal Reserve rate cuts typically affect the cryptocurrency market? A: Federal Reserve rate cuts generally lead to increased liquidity in the market. This can weaken the U.S. dollar, making riskier assets like cryptocurrencies more attractive to investors seeking higher returns. Historically, periods of monetary easing have often correlated with bullish trends in the crypto market. Q: Why do lower interest rates favor cryptocurrencies? A: Lower interest rates make it easier and cheaper to access credit, which can stimulate investment in speculative assets like Bitcoin. Additionally, a weaker U.S. dollar resulting from rate cuts can make non-USD denominated assets, including cryptocurrencies, more appealing.

Divergent Bank Forecasts

Q: Why do some banks like JPMorgan and Morgan Stanley have a more cautious outlook on rate cuts compared to Goldman Sachs and Citigroup? A: Banks like JPMorgan and Morgan Stanley often cite ongoing economic uncertainty and inflation risks as reasons for their more cautious stance. They may believe that the Federal Reserve needs to maintain current rates longer to ensure price stability before initiating cuts. This divergence highlights the inherent complexity and differing interpretations in macroeconomic forecasting. Q: What external factors can influence the Federal Reserve's decision on interest rates? A: Several factors can influence the Fed's decisions, including economic slowdowns, inflation rates, employment data, global economic conditions, and even political factors like trade policies. For example, potential new tariffs can impact the U.S. economy and consequently affect the Fed's monetary policy outlook.

Crypto Market Sentiment

Q: How is the current Bitcoin price reflecting investor sentiment regarding interest rates? A: The article mentions Bitcoin consolidating around $114,000, indicating investor caution. The prospect of future rate cuts is seen as a potential bullish catalyst, while uncertainty or continued rate hikes could lead to market corrections. ##Crypto Market AI's Take The anticipated shift in Federal Reserve monetary policy, with potential rate cuts beginning in late 2025, presents a significant turning point for the cryptocurrency market. As major financial institutions like Goldman Sachs and Citigroup signal a more dovish stance, this could unlock greater liquidity and renewed investor appetite for risk assets. At AI Crypto Market, we leverage advanced AI agents to analyze these macroeconomic shifts and their potential impact on digital assets. Our AI-powered trading bots and market intelligence tools are designed to navigate these evolving market conditions, helping users identify opportunities and manage risks effectively. Understanding these key economic indicators and their implications is crucial for informed investment decisions in the dynamic crypto landscape. ##More to Read:
• How AI Agents Are Revolutionizing Crypto Trading
• Understanding the Impact of Macroeconomic Factors on Cryptocurrency

---

Source: Goldman, Citigroup Predict 3 Rate Cuts By Year-end