According to Odaily Planet Daily, Bank of America believes that the weaker-than-expected July non-farm payrolls report will help lock in the Fed's September rate cut after other data such as the ISM manufacturing report were weak. Therefore, we have adjusted our outlook for monetary policy and are inclined to further rate cuts.
We now expect the Fed to cut interest rates by 25 basis points at its September meeting. Nevertheless, we still expect the Fed to gradually ease monetary policy.
In conjunction with this revision, we also lowered our expectations for the final rate of interest in the upcoming normalization cycle by 25 basis points to 3.25-3.5%. If the economy cools faster than we or the Fed expect, then this would imply a reduced need for a prolonged high interest rate policy stance.
