American Bank: Expects the Federal Reserve to cut interest rates by 25 basis points at its September meeting.
Bank of America believes that the weaker-than-expected July non-farm payroll report, following other soft data such as the ISM manufacturing report, helps lock in a Federal Reserve rate cut in September. As a result, we have adjusted our monetary policy outlook and are 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. Alongside 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 faster than we or the Federal Reserve expect, this means the demand for a higher long-term rate policy stance has diminished.
