In a recent report, Bank of America said the US economy maintains its solidity thanks to consumption and sustained inflation in goods, so it does not expect rates cuts by the Federal Reserve in the remainder of the year. He also warned about the risks of monetary decisions influenced by the political climate.
Bank of America (Bofa) It projects that the US economy will avoid a recession this year and that the Federal Reserve will keep interest rates without changes throughout 2025, despite the political and financial volatility that surrounds the electoral scenario.
In a report published Monday, bank analysts indicated that the latest data reinforces their vision of an economy that continues to show signs of strength. “These developments coincide with our vision that the US economy will avoid a recession and the Fed will not cut rates this year,” they said.
Bafa stressed that consumer spending It remains firm and that inflation, particularly in goods, remains persistent. According to the report, the retail sales control group – a key measure for the calculation of the GDP – grew a 0.5% monthly in Junewhile the item of Food services A advance 0.6%.
Powell Fed.jpg Federal Reserve
The risks of inflation in the US
The bank also warned about the Risk of monetary decisions influenced by political issues. In that sense, he considered that “cutting fees to help finance the government deficit is probably one of the worst reasons to do so”, referring to the recent questions of President Donald Trump towards Jerome Powell, head of the Federal Reserve.
“This unnecessary political noise elevates the barrier to cuts,” said Bofa economists, while alerting about the negative effects that could have an early flexibility of monetary policy. According to the report, reducing premature rates could “disagree with inflation expectations, weaken the dollar and increase credit risk”, in addition to causing an end to the yield curve.
Looking forward, the bank anticipates a slight increase in Unemployment Subsidy Applications For the week closed on July 19, while he expects the real estate market data stay stable. As for orders for durable goodsa fall of the 11% monthly In the data that will be announced this Friday.
Source: Ambito
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