Goldman Sachs Group, Inc. (NYSE:GS) CEO David Solomon believes the market is being overly-optimistic about potential rate cuts in 2024. Solomon shared his more conservative Federal Reserve rate outlook Wednesday at the World Economic Forum in Davos, Switzerland.
What Happened: The market is currently anticipating seven rate cuts this year, but Wednesday on CNBC’s “Squawk Box,” Solomon reminded investors that Fed Chair Jerome Powell has said the central bank will make future rate decisions based on current inflation trends and other economic data.
“It’s hard for me to see the market’s view of seven cuts, you know, this year,” the Goldman Sachs CEO said.
Solomon explained that although he sees a path toward some rate cuts and easing this year, the chance of rate cuts is smaller than it seemed to be six months ago.
“I see some signs of softness which would lead you to believe that we are going to see some cuts, but there is a lot going on in the world,” he said.
However, the market tends to get it right, Solomon said: “The market is much smarter than I am, so the market may be right.”
Despite Solomon’s expectations for fewer rate cuts in the short term, he doesn’t anticipate a major correction or “reckoning” in the markets in 2024.