Filed under: Forecasts, Other issues, Bad news, Goldman Sachs Group (GS), Housing, Federal Reserve

On Wall Street, there are forecasts…and then there are forecasts that investors/readers ignore only at their peril.

Put investment banking giant Goldman Sachs decidedly in the later category.

On Wednesday, Goldman Sachs (NYSE: GS) said the U.S economy is probably slipping into a recession, and also predicted that the U.S. Federal Reserve will cut its benchmark interest rate, the Fed funds rate, substantially, to 2.5% from 4.25% by third quarter, Bloomberg News reported.

Goldman, which projects an anemic 0.8% growth rate for the U.S. economy for all of 2008, also said it expects the Fed to lower its key interest rate to 3% by the middle of 2008, Bloomberg News reported.

To counteract the effects of the housing’s sector’s correction and other drags on the U.S. economy, including high energy prices, the Fed has cut benchmark interest rates three times since September.. The Fed Funds rate, the rate banks charge each other, now stands at 4.25%, and the discount rate, the rate the Fed charges banks for short-term loans, is at 4.50%. The Fed also set up a special term auction facility to help banks maintain short-term liquidity.

Continue reading Goldman recession forecast can’t be ignored

Read | Permalink | Email this | Comments

Share This

This entry was posted on Wednesday, January 9th, 2008 at 4:04 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.