It does not normally take long, after interest rates appear to have peaked, for economists to start speculating over when the first cut will occur. Goldman Sachs waited only a week after the Federal Reserve’s last meeting before saying US rates would have to fall by 125 basis points (just over a percentage point) next year.

For Goldman, the driving force will be the slowing housing market which will hit consumer demand and drag annualised GDP growth down to 2 per cent by the second quarter of 2007. Some see the inversion of the yield curve (bond yields being lower than short-term interest rates) as a sign that the economy will slow and the Fed will have to cut.