BoA unconvinced the FOMC rate hike cycle is over, more ahead has “USD supportive aspects”

Bank of America economic analysts on their outlook for the Federal Open Market Committee (FOMC) and the implications for the US dollar.

  • We retain our view that the Fed has one more policy rate hike in
    store and look for a 25bp rate hike at the September FOMC meeting for
    a terminal target range of 5.50-5.75%
  • we retain our view that the first policy
    rate cut will come in May 2024

For the currency:

  • Despite the USD’s notable selloff earlier this month, we remain
    constructive in the short term, as broader economic resilience
    suggests that eventual rate cuts would likely occur later than
    currently priced, all else equal
  • While we
    still see the dollar overvalued for the longer term, the fight
    against inflation in a relatively resilient economy should have USD
    supportive aspects

This article was written by Eamonn Sheridan at Source