6 reasons markets are way too optimistic on Federal Reserve rate cuts

Bank of America warns that markets are going to be disappointed with their overly bullish expectations for rate cuts from the Federal Open Market Committee (FOMC):

  • “… markets now pricing close to 50bp of cuts this year, they are likely to get disappointed”
  • Interest rate cuts are “still a way off”

BoA roll out a slew of reasons there will be no Fed Funds cut soon:

  • 1Q inflation was too high
  • a single print should not deliver much comfort, especially if it annualizes to a rate much higher than consistent with the Fed’s target,
  • the economy is still solid, including services spending
  • the labor market remains tight
  • supply tailwinds could fade
  • and elections are approaching

This article was written by Eamonn Sheridan at www.forexlive.com. Source