Bank of America are forecasting a June rate cut from the Federal Open Market Committee (FOMC), saying they expect that the January topside surprise was a 'blip':
- CPI report reinforces the Fed’s concern that core services inflation will remain sticky because of a tight labour market.
- In our view, a March cut is now firmly off the table and the chances of a May cut have significantly reduced.
- But we remain comfortable with our call for rate cuts to begin in June.
- While risks are now obviously skewed toward a delay, there will be four more CPI prints before the June decision, which leaves plenty of time to re-establish the disinflation narrative if (as we expect) the January inflation data prove to be a blip rather than the start of a new trend.
---
The turn around on Wednesday shows there are a lot thinking what BoA are thinking:
AI image
Powell apparently concurs:
