Bank of America: The Fed seems to be more inclined to a dovish rather than hawkish surprise move

Economists at Bank of America responded to client concerns in a report, stating that the actions of the Federal Reserve are often milder than expected in history, avoiding hawkish surprises. "The Fed usually likes to fully announce any hawkish signals in advance to avoid exacerbating the financial environment. The Fed seems more willing to bring surprises in a mild direction." According to data from CME Group, the market currently expects a 55% probability of a 50 basis point rate cut by the Fed, while the probability of a more moderate 25 basis point cut is 45%. "Bank of America believes that the Fed is unlikely to implement a hawkish rate cut, which should provide support for long-term bonds and steepening of the yield curve."