Bank of America: Markets may soon begin betting on a Fed rate cut in January.
TL;DR
Bank of America predicts markets may soon bet on a Fed rate cut in January, despite cautious signals, as upcoming data could make it hard for Powell to suppress easing expectations.
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On December 5th, Bank of America noted that despite the Federal Reserve's cautious policy signals, the market may soon begin to more aggressively bet on a rate cut in January. The bank expects the Fed to cut rates by 25 basis points in December, while issuing more hawkish guidance and facing several objections. Its economic forecasts are expected to show stronger growth and lower inflation.
Bank of America believes that given the large amount of data to be released before January, Chairman Powell will find it difficult to effectively suppress market expectations for further easing. Analysts say that with the market focused on the upcoming data releases, Powell is unlikely to change market expectations regarding a "data-dependent" policy. (Jinshi)