Bank of America abandons forecast to cut interest rates this year and postpone its first rate cut to the second half of 2027

The U.S. CPI increased by 3.8% year-on-year in April, the highest since May 2023, higher than market expectations of 3.7%. Earlier, Bank of America economists said in a report to clients on May 8 that due to inflationary pressures that continued to be higher than expected and employment growth was solid, they had abandoned their previous forecast of cutting interest rates once in September and October this year, and postponed the first interest rate cut until the second half of 2027.<br /> The previous view was based on Trump's expectation of nominating Kevin Walsh to replace Powell as chairman of the Federal Reserve, and that the policy would tend to be loose. But now as the economic situation changes, this view has changed. "We no longer expect the Fed to cut interest rates this year," the report said. They also pointed out that multiple shocks affecting the economy, including the war in Iran, tariffs, and the rise of artificial intelligence, have made it more difficult to predict changes in interest rates.