BofA Reportedly Forecasts Two Rate Cuts In 2025 Following August Jobs Report

Bank of America Global Research reportedly forecasted on Friday that the Federal Reserve will cut interest rates twice following a weaker-than-expected August jobs report.

The firm expects the Fed to deliver two 25-basis-point rate cuts, one in September and the other in December, according to a Reuters report.

BofA previously forecast no interest rate cuts in 2025. The CME FedWatch tool indicates that there is now an 86% probability of the central bank cutting rates by 25 basis points in September.

However, the chief strategist of Europe’s largest asset manager believes there is space for three rate cuts in 2025, according to a Bloomberg report. “A slower growth pace of the U.S. job market would support the case for two interest rate cuts by the Fed this year, while political pressure would allow for a third one,” Monica Defend, who heads strategy for Amundi SA, said in an interview.

Data from the Bureau of Labor Statistics (BLS) on Friday showed nonfarm payroll additions in August stood at 22,000, lower than the Dow Jones estimate of 75,000. The unemployment rate rose in August to 4.3%, continuing the upward trend observed in July, when it increased to 4.2% from 4.1% in June.

Meanwhile, U.S. equities declined in Friday morning’s trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.53%, while the Invesco QQQ Trust (QQQ) fell 0.18%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bullish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.69% at the time of writing.

Also See: White House Economic Advisor Kevin Hassett Calls August Jobs Report ‘Disappointing’, Expects It To Be Revised Upwards: Report

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