Hedging their call for another interest rate increase, economists at the bank said they see “meaningful risks that the Fed” could be done altogether.
Federal Reserve policymakers all but confirmed this week that the US central bank will be on hold at its November meeting, and that’s led Bank of America to push back its bet for one more interest rate rise to December.“While the Fed is willing to ‘watch and see’ how the data evolve for now, we think policymakers will opt for one last hike in December,” BofA economists led by Michael Gapen said in a note. “We think the strong September data keep another hike in play. But it is a close call.
“We have argued previously that the Fed is unlikely to hike if it is flying blind,” BofA’s Mr Gapen said. “But policymakers would be in a particularly sticky situation if the government shuts down after another four weeks of robust data. In this case, rate hike pricing would probably move out into January.”
LPL Financial chief economist Jeffrey Roach said he believes the US economy is slowing enough that “the markets are overpricing the likelihood of more rate hikes”.While markets clearly struggled to interpret Fed chairman Jerome Powell’s comments this week
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