The Fed's Tightrope: Inflation, Labor, and the Path Ahead

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Goldman Sachs

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4.4 • 1K Ratings

🗓️ 18 November 2025

⏱️ 20 minutes

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Summary

With inflation above target and the labor market weakening, is the Fed poised to cut rates again? Rob Kaplan, Vice Chairman of Goldman Sachs, discusses the uncertain outlook with Allison Nathan. This episode was recorded on November 12, 2025. The opinions and views expressed herein are as of the date of publication, subject to change without notice, and may not necessarily reflect the institutional views of Goldman Sachs or its affiliates. The material provided is intended for informational purposes only, and does not constitute investment advice, a recommendation from any Goldman Sachs entity to take any particular action, or an offer or solicitation to purchase or sell any securities or financial products. This material may contain forward-looking statements. Past performance is not indicative of future results. Neither Goldman Sachs nor any of its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the statements or information contained herein and disclaim any liability whatsoever for reliance on such information for any purpose. Each name of a third-party organization mentioned is the property of the company to which it relates, is used here strictly for informational and identification purposes only and is not used to imply any ownership or license rights between any such company and Goldman Sachs. A transcript is provided for convenience and may differ from the original video or audio content. Goldman Sachs is not responsible for any errors in the transcript. This material should not be copied, distributed, published, or reproduced in whole or in part or disclosed by any recipient to any other person without the express written consent of Goldman Sachs. Disclosures applicable to research with respect to issuers, if any, mentioned herein are available through your Goldman Sachs representative or at http://www.gs.com/research/hedge.html. Goldman Sachs does not endorse any candidate or any political party. © 2025 Goldman Sachs. All rights reserved. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	The U.S. economy is navigating some tricky waters right now, with still high inflation,
0:10.5	a weakening labor market and an evolving policy landscape, making the outlook and the Fed's
0:16.0	next steps quite uncertain. My guest today is Robert Kaplan, Vice Chairman of Goldman Sachs, and former
0:24.6	president of the Dallas Fed. Rob, welcome back to exchanges. Good to be with you. So, Rob,
0:29.9	let's start right in with the Fed. Chair Powell made some pretty hawkish comments after the last
0:35.8	FOMC about the prospect of a December rate cut.
0:39.7	It surprised some people we in Goldman Sachs research are still expecting a cut in December.
0:45.1	The market seems somewhat less convinced.
0:48.1	What's your read on those comments?
0:50.2	So you may know going into the October meeting, I had been saying that the market expectation
0:57.6	of a further rate cut in December, the probabilities of that rate cut were, to my eye, way too
1:04.3	high. It doesn't mean the Fed won't cut rates in December, but I think it's a much tougher
1:09.8	decision. And so I was glad that Jay,
1:14.0	in the press conference, balanced the decision a little bit more and left the Fed more time
1:22.1	to really debate this out. And you see more articles about a split in the committee. It's understandable.
1:29.2	So what's the split about? The labor market is weak. We know that. And Jan Hatsius has very
1:34.8	eloquently explained that weakness and hiring is down to stall speed. And why is that? There's
1:42.0	three big headwinds that are creating that weakness. One, tariffs in the
1:46.9	near term, at least, in my opinion, are slowing growth. And we could go through much more detail,
1:52.0	but for purposes of this call, they're having the effect of causing big businesses to do somewhat less.
2:00.5	They're having a more pronounced effect on small businesses, and we're seeing that.
2:05.7	In addition, it's not just a cutoff of lax immigration, which I think is probably a very
	...

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