Goldman Sachs resets Fed rate cut outlook under Warsh

Group 1 - Jerome Powell's term ends on May 15, and President Trump has nominated Kevin Warsh, who is expected to be confirmed easily by Congress [1] - Warsh is historically viewed as a hawk, having criticized quantitative easing and low rates aimed at stimulating the economy [1] - Goldman Sachs suggests that a Fed led by Warsh may not necessarily keep rates higher, indicating that interest rate cuts and quantitative easing remain possible [2] Group 2 - Wall Street expresses concern that under Warsh, the Fed may not cut rates as aggressively [3] - The Fed's monetary policy is influenced by a dual mandate, which aims to balance unemployment and inflation, often leading to conflicting goals [4] - Goldman Sachs believes that Warsh's views on inflation and artificial intelligence as a deflationary force may lead to rate cuts, with expectations of two reductions in 2026 [6]