Bank of America: The Federal Reserve may take longer to cut interest rates than the market expects

The Federal Reserve will announce its latest interest rate decision on Wednesday. The FedWatch tool from the Chicago Mercantile Exchange shows that the likelihood of a rate cut at this meeting is almost zero. Bank of America economist Claudio Irigoyen stated that, compared to market expectations of three rate cuts starting in July this year, the bank believes that delaying the rate cut is the best policy.

He noted that rising inflation and declining economic activity will lead to stagflation, making the Federal Reserve's job more difficult. Therefore, priority should be given to inflation risks and consolidating the Fed's credibility. Unless activity data declines significantly, a rate cut should be postponed