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The Goldman Sachs logo. / Photo via Reuters, Yonhap News

The US investment bank Goldman Sachs expects that the Federal Reserve (Fed) will not cut its benchmark interest rate this year, citing reasons such as the stronger-than-expected labor market, Bloomberg News reported on the 7th (local time).

According to Bloomberg News, Goldman Sachs pushed back its projected timeline for benchmark interest rate cuts from its previous expectations of December this year and March next year to June and December next year.

While Goldman Sachs still views a rate hike as "unlikely," it revised the probability upward from 10% to 20%.

The shift in Goldman Sachs' outlook reflects the fact that the US labor market remains robust, with May employment data beating market expectations.

Hawkish (favoring monetary tightening) remarks intensified by Fed officials and the continued resilience of economic activity also played a role.

Goldman Sachs expects two rate cuts to be implemented in 2027, but lowered the probability from the previous 40% to 30%.

Furthermore, it analyzed that if investment demand for artificial intelligence (AI) continues to stay strong, the view that interest rates must be kept at a high level for an extended period could gain greater weight.

The projection for the US unemployment rate was revised downward from the previous 4.6% to 4.4%. Bloomberg News added that this signals a labor market stronger than previously anticipated.

                                                                                                            Park Jin-sook