BofA Revises Fed Outlook, Expects Interest Rate Cuts Only in 2027

BofA has sharply revised its Federal Reserve outlook and now expects interest rate cuts only in 2027. The new forecast reflects rising inflation risks, strong US jobs data, and continued pressure from higher oil prices linked to the Middle East conflict. Investors were earlier expecting the Fed to start easing policy in late 2026, but major Wall Street firms are now pushing those expectations further ahead. The updated view has already affected bond yields, stock market sentiment, and global investor confidence.

BofA Changes Fed Rate Cut Forecast

BofA Global Research now expects the Federal Reserve to keep rates steady through all of 2026 and begin cutting only in the second half of 2027. According to Reuters, the brokerage expects two quarter-point cuts in July and September 2027. Earlier forecasts had projected cuts during September and October 2026. The change came after stronger-than-expected labor market data and rising inflation concerns across the US economy.

The current Fed funds rate remains between 3.50% and 3.75%. Inflation is still above the Fed’s 2% target, while unemployment stayed near 4.3% in recent data releases. Analysts believe the Federal Reserve will remain cautious because consumer prices and energy costs continue to stay elevated. Many investors using AI Stock research platforms are closely tracking every Fed statement for signals about future policy changes.

Why is the Fed delaying cuts? Analysts say the labor market has remained stronger than expected. Wage growth, consumer spending, and business activity have not weakened enough to justify easier monetary policy.

Market Reaction to the BofA Outlook

Wall Street brokerages, including Goldman Sachs, Barclays, Morgan Stanley, and Deutsche Bank, have also delayed their rate cut expectations. Some analysts even warned that the next Fed move could be a rate hike instead of a cut if inflation remains stubbornly high. Treasury yields moved higher after the updated forecasts, while investors adjusted expectations for borrowing costs and corporate earnings.

The latest forecasts have become important for investors focused on AI Stock analysis because higher interest rates can affect technology valuations and growth stocks. Trading tools that monitor bond yields and inflation trends are also seeing higher demand as market volatility increases.

Tweet discussions around the Fed outlook also gained attention online.

🇺🇸BOFA GLOBAL RESEARCH EXPECTS US FEDERAL RESERVE TO DELIVER TWO 25 BP RATE CUTS EACH IN JULY AND SEPTEMBER 2027 VS PRIOR FORECAST OF CUTS IN SEPTEMBER AND OCTOBER 2026
(https://t.co/fegW076dpd) pic.twitter.com/UvzrlkpzhF

— CN Wire (@Sino_Market) May 11, 2026

Fed unlikely to cut interest rates until second half of 2027, Bank of America says https://t.co/uLEKDwqVXC

— CBSColorado (@CBSNewsColorado) May 9, 2026

Bank of America Rules Out Interest Rate Cuts Before 2027… Here’s Whyhttps://t.co/bHE13Lz6JT pic.twitter.com/N9FvdeoiGN

— Maaal Economy News (@maaalnews_en) May 10, 2026

What Investors Should Watch Next

Investors will closely monitor inflation reports, oil prices, employment data, and future Federal Reserve meetings. Several Fed officials recently said rates may stay higher for a long period because inflation pressures are not easing fast enough. Reports from Reuters also noted that geopolitical tensions and energy market disruptions continue to add uncertainty to the economic outlook.

Conclusion

For now, markets expect the Fed to remain patient while monitoring inflation and economic growth. Investors searching for stability are focusing on diversified portfolios, defensive sectors, and careful risk management strategies. The delayed rate cut outlook from BofA shows that the fight against inflation is still far from over.

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Disclaimer

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.