Bank of America adjusted its forecast regarding the Federal Reserve’s monetary policy, indicating that the rate-cutting phase has come to an end. This shift followed the latest jobs report, which demonstrated strong performance in the labor market.
In a report issued after the release of the jobs data, Bank of America economists stated: “With the labor market continuing to show clear resilience, we believe the rate-cutting phase is over.” The report highlighted a significant increase in December payrolls, alongside a drop in the unemployment rate to 4.1%. These figures exceeded expectations, reflecting the economy’s strength in overcoming recent challenges.
Bank of America attributes this change to the stability seen in the labor market after a period of fluctuations, coupled with inflation remaining above the Federal Reserve’s targets, making further monetary easing less likely.
Despite the stability in the core Personal Consumption Expenditures (PCE) index, its levels remain above the Federal Reserve’s target. This poses a barrier to any additional easing in monetary policy.
