The Bank of America stated that the Federal Reserve may be signalling its willingness to hold interest rates, but saw that it will be quite rare for the central bank to cut rates with inflation remaining at a high level and unemployment at a low level.
The Bank of America stated that rate cuts are not likely to happen in 2023 unless something really big happens. Due to this reason, it is not yet the time to buy equities as outflows pick up pace amid rising inflation and fears of recession.
Last week, the Federal Reserve raised an interest rate by 25 bps to 5.25% as expected. Meanwhile, the unemployment rate dropped to 3.4%. Nonfarm payrolls rose 253,000 in April, which was more than the expectation of economists, and after a downwardly revised 165,000 increase in March.
Bank of America’s Michael Hartnett said that a new structural bull market requires big Fed easing, and to be able to achieve that, the market needs a big recession.
