Bank of America Delays Rate Cut Forecast to Late 2027 Amid Rising Inflation

ChainCatcher report: U.S. April CPI rose 3.8% year-over-year, the highest level since May 2023 and above the market expectation of 3.7%. Previously, on May 8, Bank of America economists stated in a client report that, due to persistently higher-than-expected inflation pressures and robust job growth, they had abandoned their prior forecast of two 2024 rate cuts in September and October, and now expect the first rate cut to occur in the second half of 2027. The earlier view was based on the expectation that Donald Trump would nominate Kevin Warsh to succeed Powell as Fed Chair, suggesting a more accommodative policy shift. However, with changing economic conditions, this perspective has now shifted. The report noted, “We no longer expect the Fed to cut rates this year.” They also highlighted that multiple economic shocks—including the Iran conflict, tariffs, and the rise of artificial intelligence—have made forecasting interest rate movements significantly more challenging.