BofA says that the time is right for the Fed to “take the initial steps in changing its communication from a hawkish hold to dovish one”. In that lieu, they expect the central bank to keep rates unchanged until at least June 2024 before committing to rate cuts. As a whole for next year, BofA is anticipating 75 bps worth of rate cuts by the Fed.
For today, they note that the forward guidance could be changed in order to focus on the Fed's commitment to maintain its current policy stance i.e. sufficiently restrictive in guiding inflation back towards the 2% target. Adding that such a communication would be "flexible enough to keep both cuts and hikes on the table, while opening the door more concretely to cuts as a first step in the direction of a dovish hold".
