According to Bank of America, growing consensus within the Federal Reserve suggests two more 25 basis point rate cuts this year, as officials adopt a more dovish tone amid labor market concerns.
Bank of America reported that Federal Reserve officials appear increasingly aligned on implementing two additional 25 basis point rate cuts in 2025. The shift follows New York Fed President John Williams’s recent comments highlighting labor market risks and his support for returning rates to a neutral level. While some members, including Governor Michael Barr and regional presidents Austan Goolsbee and Alberto Musalem, expressed caution about inflation, the broader sentiment favors continued monetary easing after September’s cut. Market expectations reflect near certainty of rate reductions at the Fed’s October and December meetings. Concurrently, the Bureau of Labor Statistics plans to release the September CPI report despite the government shutdown, potentially influencing policymakers’ decisions.