BofA Global Research economists said that the Fed, which began its monetary easing cycle yesterday, is likely to cut interest rates by another 0.75% by the end of this year. Earlier, they predicted a 0.5% rate cut - 0.25% each in November and December.
Yesterday, the Fed cut the interest rate by 0.5%, saying that such a move demonstrates the commitment of policymakers to keep unemployment low.
As for next year, BofA Global Research economists predict an easing of the Fed's monetary policy by another 1.25%, as a result of which the rate will be in the range of 2.75%-3.00%.
"We believe that the US Central Bank will be forced to make more serious rate cuts. After yesterday's decision, we are skeptical that the Fed will want to present a hawkish surprise," the economists said.
Meanwhile, Goldman Sachs economists still expect a 0.5% rate cut by the end of the year. However, they added that they now forecast a consecutive 0.25% from November 2024 through June 2025.