A Stance Opposed to Trump
David Solomon, Chief Executive Officer of Goldman Sachs, stated that the U.S. Federal Reserve (Fed) does not need to rush to cut interest rates. This position stands in opposition to former U.S. President Donald Trump, who has been repeatedly urging the Fed to lower rates.
According to Bloomberg News on September 8 (local time), CEO Solomon said at the Barclays Financial Services Conference, "Given the current risk appetite in the market, I don't feel that the current policy rate is particularly restrictive." He also assessed that investor sentiment in the market is currently at a very high level.
CEO Solomon pointed out that while the current economic environment is generally positive, trade policy is acting as a headwind to growth, and uncertainty is slowing investment. Nevertheless, he added, "Despite the headwinds and uncertainty, there are some constructive factors present."
These remarks are in direct contrast to President Trump's stance, as he has been strongly pressuring the Fed to cut rates. U.S. Treasury Secretary Scott Besant argued last month that the Fed should begin a rate-cutting cycle and that rates should be at least 1.5 percentage points lower than their current level.
According to CME FedWatch, the federal funds futures market on this day saw an 88.4% probability that the Fed would cut the current annual rate of 4.25-4.5% by 0.25 percentage points this month, and an 11.6% probability of a 0.5 percentage point cut. There is also speculation about the possibility of further cuts by the end of the year.
In a report, JPMorgan Chase warned that if the Fed decides to cut rates at the upcoming Federal Open Market Committee (FOMC) meeting on the 17th, it could actually trigger a wave of profit-taking sell-offs.
Recently, Goldman Sachs has become a target of criticism from the Trump administration. President Trump mocked CEO Solomon, criticizing a Goldman Sachs report on his tariff policy and saying that Solomon should focus on his DJ activities instead of running a financial institution. Secretary Besant also criticized Goldman Sachs during an appearance on NBC the previous day, saying, "I built a successful career by trading against Goldman Sachs."
Meanwhile, Ken Griffin, CEO of the hedge fund Citadel and a major Republican donor, criticized President Trump for attacking the Fed in an op-ed published in The Wall Street Journal (WSJ) the previous day.
In the op-ed, co-authored with Anil Kashyap, a professor at the University of Chicago Booth School of Business, he wrote, "A president who publicly criticizes the Fed, suggests removing its board members, and pressures the central bank to take a more lenient stance on inflation imposes significant costs." He pointed out, "Such actions raise inflation expectations, increase the market risk premium, and undermine investor confidence in American institutions."
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