Echovera

Other

No more Fed cuts under Powell, says BofA

🔍 What BofA says

BofA economist Shruti Mishra argues that the U.S. labour market remains relatively tight (unemployment near historic lows) and labour-supply constraints (e.g., lower net immigration) will keep the job market from loosening significantly.

Given that backdrop, BofA sees “limited scope for the Fed to cut rates further” and believes there may be no more rate cuts under Chair Powell.

The view is that inflation still poses a risk, and that the labour-market dynamics reduce the urgency or room for further monetary easing.

📊 Why this is important

If the Fed stops cutting rates, borrowing costs will remain higher for longer — this affects consumers (mortgages, auto loans), businesses, and markets.

It shifts the narrative away from “more easing ahead” to a more neutral or even restrictive stance, depending on outcomes.

Markets that had pencilled in a rate cut expectantly will need to recalibrate.

For policy watchers, this implies that any action by the Fed will lean closely on new data (inflation, job growth, labour supply) rather than relying on a pre-set path of cuts.

🧭 Key caveats

BofA’s view is one firm’s forecast — the Fed is data-dependent and internal views among policymakers vary.

A strong deterioration in the economy (sharp job losses, deflationary shock) could still trigger a cut, despite this view.

Timing matters: the exact meeting, the size of any move, and how communication is handled will all influence market reaction.

Markets may have already adjusted somewhat to this view, but surprises remain possible.

✅ Bottom line

BofA is signalling: don’t count on further rate cuts under Powell unless something dramatic changes. For market participants and consumers, that means a potential environment of higher-for-longer rates with implications across borrowing, investing and spending decisions.

Would you like me to pull in recent Fed meeting minutes or market-implied rate expectations (e.g., futures pricing) to see how this view is being priced in across markets?