Goldman Sachs sees 15% chance of a 50bp Fed rate cut in July

Analysts at Goldman Sachs see only 15% probability of the US Federal Reserve cutting rates by 50 basis points on July 31. The investment bank, however, puts the probability of a 25 basis point rate cut at 75%. 

Further, it expects the Fed to deliver one more rate cut in September. 

The market pricing is now implying around 30 basis points of easing on 31 July.

Fed's Chair Powell, during his testimony to the House Financial Services Committee on Wednesday,  said “many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened.”

Markets seems to have taken Jerome Powell’s testimony as a signal that the Federal Reserve is fully on board for rate cuts. This is evident from the six basis point drop in the US 2-year treasury yield.