- The Federal Reserve's move to lower interest rates by 50 basis points puts the U.S. economy on track for a soft landing, according to Goldman Sachs' chief financial officer.
- His comments come as market participants question whether the U.S. central bank's jumbo rate cut has been delivered in time to bring down inflation without pushing the economy into recession.
- Not everyone is convinced the U.S. economy will continue to hold up over the coming months.
The Federal Reserve's move to lower interest rates by 50 basis points puts the U.S. economy on track for a soft landing, according to Goldman Sachs Chief Financial Officer Denis Coleman.
His comments come as market participants question whether the U.S. central bank's jumbo rate cut has been delivered in time to bring down inflation without pushing the economy into recession.
Some analysts have raised concerns about the outlook for the U.S. economy, warning that similar supersized rate cuts could not avert the recessions of the early 2000s and the global financial crisis.
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In a decision that came as a surprise to some economists, the rate-setting Federal Open Market Committee on Wednesday voted to reduce its benchmark overnight borrowing rate by half a percentage point, or 50 basis points, to a targeted rate of 4.75% to 5.00%. One basis point equals 0.01%.
It was the first time the FOMC had cut by that much since the early days of the Covid-19 pandemic and, before that, the global financial crisis in 2008.
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"I think this first 50 basis point cut is a clear signal in terms of the new direction. And hopefully that will unlock incremental amounts of confidence, and should obviously reduce cost of capital — and perhaps for some more strategic activity heading into the end of this year," Coleman told CNBC's Annette Weisbach on Tuesday.
"As we move into 2025, [it will] hopefully improve backlogs and more activity across the markets," he said.
Asked whether the Fed's rate cut may have secured a soft landing for the U.S. economy, Coleman said it was his hope and expectation that this would be the case.
"Right now, that is consensus," Coleman said. "It's always a very tricky job to manage economies through transition. But you know, inflation levels are coming down, unemployment is manageable, they're starting to put through the rate cuts and sort of maintain a soft-landing trajectory."
Dimon: 'Put me on the cautious side'
Not everyone is convinced that the U.S. economy will continue to hold up over the coming months.
"I'm a long-term optimist. Short term, I'm a little more skeptical than other people that everything's going to be great," JPMorgan Chase CEO Jamie Dimon said in an exclusive interview with CNBC-TV18 released Tuesday.
"Markets are pricing things like they're going to be great. Put me on the cautious side of that one," he added.
— CNBC's Jeff Cox contributed to this report.