Goldman Sachs' Rob Kaplan Says Bar For Rate Cuts After October Will Be 'Higher Than The Market Thinks': Report

• Kaplan has called on the Fed to be “very careful” with deciding the monetary policy going forward.
• He added that President Donald Trump’s tariffs have slowed growth, at least in the short term.
• Kaplan’s comments come days ahead of the Federal Open Market Committee’s (FOMC) meeting later this month.

Goldman Sachs Vice Chairman and former Dallas Fed President Rob Kaplan reportedly said that while the Federal Reserve may cut the policy rate in October, the bar will be higher than the market thinks for future rate cuts.

During an interview with CNBC, Kaplan said that President Donald Trump’s tariffs have slowed growth, at least in the short term. The Trump administration’s immigration policies have also dampened the economic prospects, he said, but added that the U.S. economy is benefiting from tailwinds due to artificial intelligence.

Kaplan Says Fed Has To Be ‘Very Careful’

Kaplan stated that the Federal Reserve has to be “very careful” after the potential rate cut in October.

“I think the bar after October is higher than the market thinks about further cuts.”

— Rob Kaplan, Vice Chairman, Goldman Sachs

Kaplan’s comments come days ahead of the Federal Open Market Committee’s (FOMC) meeting later this month. According to data from the CME FedWatch tool, there is a 98.9% probability of a 25 bps interest rate cut this month.

Growth Prospects For 2026

While noting that the Trump administration’s policies have been a “mixed bag” for the U.S. economy, Kaplan sounded optimistic about growth prospects for 2026.

“Business isn’t great, but it’s not falling off a cliff. It’s sluggish to solid, depending on the area (industry). I’m more optimistic that with tax incentives to the AI boom, regulatory relief coming, we could get some firming into next year,” he said.

Last week, Fed Governor Stephen Miran said that the downside risks to the U.S. economy had increased due to China’s rare earth export controls. “There’s now more downside risks than there was a week ago, and I think it’s incumbent upon us as policymakers to recognize that should get reflected in policy,” he stated.

Miran added that the recent flare-up in trade tensions with China has resulted in increased uncertainty about the U.S. economy, making it necessary for the Fed to adopt a more neutral monetary policy more quickly.

Meanwhile, U.S. equities rose in Monday morning’s trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.96%, the Invesco QQQ Trust ETF (QQQ) surged 1.31%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 0.8%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘extremely bearish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.03% at the time of writing.

Also See: Kevin Hassett Says Shutdown Is ‘Likely To End Sometime This Week’: Report

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