Bank of America (BAC) has revised its outlook on the Federal Reserve’s interest rate decisions, stating it no longer expects further rate cuts. In fact, the bank’s analysts now suggest a potential rate hike could be on the horizon. They believe the rate-cutting cycle is over, and while the Fed is likely to hold rates steady for a while, any future moves may lean toward an increase.
This shift in perspective comes after a stronger-than-expected U.S. jobs report for December, which showed nonfarm payrolls increased by 256,000, the highest since March. Economists had anticipated a gain of 160,000 jobs, and the revisions to previous months showed fewer job additions than initially reported.
As a result, Wall Street firms like J.P. Morgan and Goldman Sachs have delayed their expected rate cuts from March to June, reflecting the strength of the labor market. J.P. Morgan emphasized that unless there is a sharp downturn in the jobs market, the Fed is unlikely to ease rates soon.
Wells Fargo also echoed this sentiment, saying a March rate cut is becoming less likely, while ING highlighted that inflation concerns might lead to an extended pause in rate changes. Morgan Stanley, however, still holds onto the idea that a rate cut in March is possible due to its optimistic inflation outlook.
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