Economists at Bank of America have revised their projection for a Federal Open Market Committee (FOMC) rate cut, citing the, you guessed it, hotter-than-expected CPI data for March.
BoA were calling a June FOMC rate cut.
In shifting their call to June they have also shifted their expectation to just one rate cut in 2024
BoA warn even the December cut is not a certainty:
- “More upside surprises to inflation could push cuts into 2025”
More:
- One cut in 2024
- continue to expect the Fed to cut four times (or by 100bp) in 2025 and two times (50bp) in 2026
- The acceleration of inflation this year makes a cut prior to December challenging in our view. Core CPI inflation rose by 4.5% annualized in 1 Q. up from 3.3% at the end of 2023. Core PCE is also set to show a similar acceleration. We look for a 0.25% m/m print for March, which would raise the three-month annualized rate to 3.9%. We expect inflation to remain relatively firm in the near term. We are forecasting 0.25% m/m for core PCE in March and April. This will make a cut as early as June or September unlikely absent clear signs of labor market deterioration.
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I posted this from the Journal yesterday:
