Fed unlikely to cut interest rates until 2027, Bank of America says

Bank of America predicts the Federal Reserve will delay lowering interest rates until the second half of 2027, mainly due to strong inflation and resilient job growth . Bank of America Global Research had previously penciled in two rate cuts this year in September and October. That view was partly based on the expectation that Kevin Warsh , President Trump's nominee to succeed Jerome Powell as Fed chair, would steer policymakers toward easing monetary policy. But that view has changed amid a shifting economic backdrop. "We no longer expect the Fed to cut rates this year," economists with the financial firm said Friday in a note to clients, while noting that the multiple shocks affecting the economy, including the Iran war, tariffs and emergence of AI, are making it harder to forecast interest rate moves. The BofA analysts aren't alone in expecting the Fed to stand pat this year. CME Group's FedWatch tool , a measure of financial market sentiment, shows a less than 50% chance of rate cuts until the second half of 2027. What's impeding rate cuts? Several factors could delay Fed rate cuts, BofA Global Research said. First, although Warsh has signaled his openness to easing borrowing costs, several Fed officials remain reluctant to ease rates. For instance, Federal Reserve Bank of Chicago President Austan Goolsbee and St. …