“The data simply don’t warrant cuts this year,” wrote Aditya Bhave, head of US economics at Bank of America, in a note to clients on May 8.
“Core inflation is too high, and moving up. The solid April jobs report was the last straw, especially given hawkish Fedspeak.”
Bhave and his colleagues now forecast no Fed rate reduction until July 2027, a revision from their previous call of September 2025.
Goldman Sachs economists, led by Jan Hatzius, pushed back their own forecast for the Fed’s next move to December 2026, a delay from September of this year.
The firm simultaneously lowered its estimate for the probability of a US recession over the next 12 months, suggesting the repricing reflects economic durability rather than distress.