American Bank: Expects the Federal Reserve to cut interest rates by 25 basis points at its September meeting.
According to the ChainCatcher report, Bank of America believes that the weaker-than-expected July non-farm payroll report, following other soft data such as the ISM manufacturing report, will help lock in a Federal Reserve rate cut in September. As a result, we have adjusted our monetary policy outlook and are now leaning towards further rate cuts. We now expect the Federal Reserve to cut rates by 25 basis points at its September meeting. Nevertheless, we still expect the Federal Reserve to gradually ease monetary policy. While making this forecast adjustment, we have also lowered our expectations for the ultimate rate in the upcoming normalization cycle, revising it down by 25 basis points to 3.25-3.5%. If the economy cools down faster than we or the Federal Reserve expect, this means the demand for a long-term high interest rate policy stance has diminished.
