Bank of America(US:BAC) Zhi Tong Cai Jing·2025-09-06 05:21Core Viewpoint - Bank of America economists predict two interest rate cuts by the Federal Reserve this year, in September and December, abandoning their previous hawkish stance due to weak labor market data and signs of a potential economic slowdown [1][2][5] Economic Data - August non-farm payrolls increased by only 22,000, significantly below the median economist estimate of 75,000, while the unemployment rate rose to 4.3%, the highest since 2021 [2] - The downward revision of June and July non-farm payrolls by a total of 21,000, with June's data showing negative growth for the first time since 2020, indicates a concerning trend in employment [2][5] Monetary Policy Predictions - Bank of America now expects the Federal Reserve to lower the policy interest rate target range from 4.25%-4.5% to 3%-3.25% starting in June 2026, with three cuts of 25 basis points each [1] - The market has fully priced in a 100% chance of a rate cut in September following the disappointing employment report [2] Inflation Expectations - Economists at Bank of America anticipate that the core Personal Consumption Expenditures (PCE) inflation may reach 3% in August due to tariff effects, with expectations of further increases by year-end [1] Market Sentiment - The sentiment among large investment institutions has shifted, with Bank of America being one of the last to predict a September rate cut, contrasting with its earlier stance of no cuts for the year [5] - The recent employment reports have provided significant evidence for a slowdown in the U.S. economy, influencing market expectations for more aggressive monetary easing [2][6]