Bank of America: The Federal Reserve currently has no need to cut interest rates on the scale of an economic recession.
According to a report by the Merrill Lynch Securities brokerage team, the Federal Reserve's interest rate cut in September is a foregone conclusion, but there is no need for aggressive rate cuts that would lead to a significant economic recession. The rise in the unemployment rate in July was almost entirely due to temporary layoffs, indicating that the weakness is only temporary. The employment rate in the August report may rebound, and the unemployment rate may decline. They said: "Without layoffs, the United States will not experience an economic recession, and the layoff rate is still extremely low." Merrill Lynch believes that the rate cut cycle will begin in September, with a 25-basis-point cut each quarter until the terminal rate reaches 3.25%-3.5% in mid-2026. "A 50-basis-point or more aggressive rate cut is done in an emergency, and action is taken during the interval between meetings, but we are not at that stage yet."
