David Solomon: The Fed's Not Cutting Rates Anytime Soon—And That's Okay

 

If you've been holding out hope for a quick rate cut from the Federal Reserve, David Solomon, the CEO of Goldman Sachs, is here to offer a reality check. During a chat on “The David Rubenstein Show,” Solomon made it clear that, despite some lackluster job data and the usual market ups and downs, the Fed probably won’t be slashing rates until at least September. And you know what? That might not be such a bad thing.

Let’s be honest: a lot of us were expecting the Fed to step in sooner, especially after seeing some turbulence in the global markets and disappointing job numbers. Investors had even been betting on it—derivative markets were suggesting there was a 60% chance we'd see a rate cut before the Fed’s September meeting. But according to Solomon, those hopes are fading, and the next chance for a cut is looking more like September 18.

So, what’s going on here? Well, Solomon pointed out that while the job report wasn’t great, it wasn’t a total disaster either. He also noted the recent market jitters, which were sparked by Japan’s rate hikes and some complicated financial maneuvers known as carry trades. And with the yen being undervalued, we might see more of this volatility in the near term.

But here’s the thing: Solomon doesn’t see all this market chaos as entirely negative. In fact, he thinks the current correction could be a healthy reset. Sure, the markets are going to be bumpy for a while, but that’s just how it goes sometimes. Even with Goldman upping its recession risk prediction from 15% to 25%, Solomon seems cautiously optimistic that we’ll avoid a full-blown downturn.

In short, while the road ahead might be a bit rocky, Solomon’s take is that a little patience could go a long way. So, if you’ve been waiting for the Fed to swoop in with a rate cut, you might need to sit tight—but that doesn’t mean all hope is lost.