TechFlow news — Bank of America believes that the weaker-than-expected July nonfarm payrolls report, following softness in other data such as the ISM manufacturing survey, helps lock in a Fed rate cut in September. As a result, we are adjusting our outlook for monetary policy toward additional easing.
We now expect the Federal Reserve to cut rates by 25 basis points at its September meeting. Nonetheless, we still anticipate that the Fed will gradually loosen monetary policy.
Alongside this revised expectation, we have also lowered our forecast for the terminal rate during the upcoming normalization cycle by 25 basis points, to 3.25–3.5%. Should the economy cool more quickly than we or the Fed currently anticipate, this would imply reduced need for a prolonged period of higher interest rates.
