Goldman's CEO reverses course, now expects up to 2 rate cuts in 2024

• The Fed will likely cut rates once or twice this year, Goldman Sachs CEO David Solomon says.
• Solomon previously predicted no rate cuts for this year but says he now sees more-promising data.
• He points to changing consumer behavior in response to inflation.

Two months ago, Goldman Sachs CEO David Solomon said the Federal Reserve was unlikely to cut rates at all in 2024 .

Now he's predicting one or two cuts this fall as economic data becomes more promising.

"I've been more cautious about interest-rate cuts all year than the general consensus," he told CNBC on Tuesday in an interview . "When I now look at the data and the way things are setting up, I think the perspective of one or two cuts in the fall seems more likely."

Solomon's reversal comes as recent earnings reports show that consumers are adjusting their habits in response to inflation.

"There's no question there are some shifts in consumer behavior, and the cumulative impact of what's been kind of a long inflationary pressure, even though it's moderating, is having an effect on consumer habits," Solomon said.

He referenced an earnings report from McDonald's, which showed that customers had grown weary from high prices driven by inflation . For McDonald's, that's slowed sales as low-income customers pass on eating out.

But, Solomon said, he's still hesitant to speculate strongly on rate cuts as the trajectory of the economy remains unclear in the next 12 to 18 months.

The economic environment, though, "has been relatively benign" and will likely remain benign "unless there's some other shock as we finish up the year," he said.

Solomon added that he didn't expect rate cuts to change policy too much.

"Think about policy where policy is," he said. "Can you really say that one or two cuts creates a hugely different policy picture than where we are at the moment?"