Goldman Sachs CEO Warns: Don’t Bet on 50bps Cut Despite Weak Jobs Data

Wall Street's favorite punching bag strikes again—Goldman's chief throws cold water on rate cut hopes just when markets needed some warmth.

The Jobs Data Dilemma

Fresh employment numbers stink worse than a week-old fish, but Goldman's top exec says don't get greedy. Weak data usually screams for aggressive Fed action—yet here we are, getting lectured about patience from the same folks who'd sell their grandmother's silver for a basis point advantage.

Banker Wisdom or Self-Interest?

Maybe they're worried about margin compression. Maybe they just enjoy watching traders sweat. Either way, it's another classic case of 'do as I say, not as I do' from the masters of financial irony.

Goldman Sachs CEO Sees Fed Cutting Rates in September

In an interview with CNBC, Solomon noted recent job data shows ‘some softening’ in the labor market. He urged close attention to economic signals as the year progresses. BeInCrypto recently reported that the US labor market may have been significantly weaker than previously believed. 

According to the Labor Department’s Bureau of Labor Statistics, a preliminary annual revision to payroll data indicated the economy likely added 911,000 fewer jobs in the 12 months through March than earlier estimates suggested.

The revision points to average monthly payroll growth being less than half of the 147,000 jobs initially reported. This further evidences the weakening signs in the labor market.

While Solomon said the economy is still chugging along, he emphasized that signs of weakening are becoming more evident.

“I’m pretty confident that we’ll have a 25 basis point cut. Whether or not we have a 50 basis point cut, I don’t think that’s probably in the cards,” Solomon told CNBC.

He also left open the possibility of one or two additional cuts later, depending on how conditions develop.

“But there’s no question we’re going to see a slight change, you know, in the policy rate as we MOVE into the fall. And I think it’ll be really data dependent on how things evolve as we go through the rest of the fall as to how that plays,” he added.

Meanwhile, markets appear to share Solomon’s outlook. The CME FedWatch Tool shows a 92% probability that the Fed will cut rates by 25 basis points next week. Meanwhile, the odds of a larger 50 basis point move stand at just 8%.

Despite this, Standard Chartered has diverged from this view. According to a Reuters report, the global banking group anticipates a more aggressive 50 basis point cut after the August jobs report.

Market watchers are also advocating for a similar cut, citing similar reasons.

“If the Fed knew how bad the labor market truly was, it WOULD have cut 25bps in March and another 25bps in June/July. There is every case to be made for a 50bps rate cut in Sept,” Zerohedge wrote.

Why the Fed will cut by fifty next week, from the Fed's own consumer survey data. It's simple math:

No jobs + no tariff inflation = 50

—on the labor side, job finding expectations utterly plunged to lowest on record. Big drop equals pandemic months and expectation slides… pic.twitter.com/XsdQ3hBjzf

In any case, whether the Fed opts for a 25- or 50-basis-point cut, the move is widely expected to be bullish for crypto markets, with lower rates seen as supportive of risk assets. While a 25 basis point cut could spark a price rally, a 50 basis point move would likely amplify the impact, providing even stronger momentum for crypto markets.

“There is now a 100% chance of a Fed rate cut in September. 10% chance it’s a 50bps cut. If that happens, crypto will explode through previous ATHs!” Mister Crypto commented.

Another analyst noted that at least a 25-basis-point cut is practically guaranteed. A 50-basis-point move, the analyst added, would be a genuine surprise. This could likely unlock additional liquidity across Ethereum, decentralized finance (DeFi), altcoins, non-fungible tokens (NFTs), and blockchain gaming.

As the September 17 meeting approaches, investors and policymakers alike will closely watch incoming economic data.