Bloomberg Talks Goldman Vice Chairman & Former Dallas Fed President Rob Kaplan Talks Fed Might Not Be Cutting Rates This Year
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May 29, 2025 Robert Kaplan, Goldman Sachs Vice Chair, predicts sluggish growth but no recession. He shares insights from the Goldman Sachs Tenth Annual Leveraged Finance and Credit Conference, emphasizing the Federal Reserve's cautious approach to interest rate cuts. The podcast also examines the impact of tariffs on small businesses and broader economic strategies as companies navigate uncertainty. Kaplan discusses inflation risks and labor market challenges, highlighting the Fed's influence on long-term interest rates amidst current economic conditions.
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Manage Supply Chains Amid Tariffs
- Bigger companies should review and adjust their supply chains actively in response to tariffs, though this takes six months to a year.
- Pressure suppliers, adjust margins, and tighten expenses to manage the impact.
Sluggish Growth Without Recession Likely
- Fiscal policy may be more expansionary or neutral rather than contractionary this year due to less cost cutting and a more expansive tax package.
- Tighter labor force from immigration changes reduces the likelihood of unemployment spiking and causing a severe downturn.
Fed Advises Patient Rate Approach
- The Fed should be patient amid uncertainty, taking one meeting at a time before deciding on rate cuts.
- Expect one to two rate cuts this year, likely just one, depending on how tariffs affect the economy.