Fed to Ease -- Goldman Sachs

A Goldman Sachs (NYSE: GS) report predicts a strong possibility the Federal Reserve will ease monetary policy by September. The most probable reason is that the economy will show evidence of a rapid slowdown or that GDP growth may flatten or even fall.

“While we think that a modest easing step is a strong possibility at the August or September meeting, we suspect that a large move is more likely to come after the election or in early 2013, barring rapid further deterioration in the already-cautious near term Fed economic outlook,” Goldman Sachs economist Andrew Tilton said in the report

Fed chief Ben Bernanke already has warned Congress and the Administration that the national deficit and lack of plans to jump-start the economy completely overshadow anything the central bank can do. If that is so, easing will not help the economy over the course of the next year.