Bank of America Executives Predict No Fed Rate Cuts in 2025

Bank of America's Cautious Outlook

Bank of America’s top executives have signaled that they do not expect the U.S. Federal Reserve to implement any interest rate cuts in 2025, a stance that contrasts with current market expectations. Brian Moynihan, the bank’s CEO, conveyed this view on behalf of its economists, emphasizing that the Fed is likely to remain cautious in light of persistent inflation and a resilient U.S. economy. The bank projects modest economic growth of between 1% and 1.5% for the year, with no sign of a recession through the end of 2025. Given these conditions, any rate reductions would likely be delayed until 2026 [1].

Market Disagreements and Economic Data

The firm’s forecast is underpinned by recent economic data, including a 5% rise in consumer spending between July 2024 and July 2025, which Moynihan described as a sign of enduring economic strength. The labor market also remains robust, with unemployment hovering around 4.2%, consistent with full employment. Although personal credit line usage has dropped by 30% since pre-pandemic levels, the credit quality of Bank of America’s customer base is strong, indicating broad-based financial health across the industry [2]. Despite these positive indicators, the market is not aligned with Bank of America’s outlook.

Market Speculation and Forecast Divergence

The CME FedWatch Tool currently suggests a 91.2% probability of a 25 basis point rate cut at the Federal Open Market Committee meeting in September 2025. This expectation has been fueled by recent weak employment data, which showed a 73,000 increase in non-farm payrolls in July—well below the Dow Jones forecast of 100,000. While Bank of America and Morgan Stanley both hold a similar view that the Fed will maintain rates in 2025, other market observers remain divided. Atlanta Fed President Raphael Bostic has projected only a single rate cut in 2025, a more restrained approach than some market participants expect [4]. The divergence in expectations underscores the uncertainty surrounding the Fed’s next move and highlights the potential for policy surprises in the coming months.

Looking Ahead

Bank of America’s stance reflects a preference for maintaining policy stability until there is clearer evidence that inflation is trending downward and the economy shows signs of cooling. Until then, the firm believes the Fed will be reluctant to reduce interest rates, prioritizing the goal of achieving a soft landing over premature easing. As the debate between market expectations and institutional forecasts continues, investors and analysts alike will be closely monitoring any policy signals from the Fed for clues about the future path of interest rates [5].