By Arlenys Tabare
Recently, analysts at Bank of the United States indicated that There is a 50% chance that interest rate cuts will begin in mid-2027, despite the fact that they had previously planned cuts for September and October; However, the spike in inflation and strong employment growth at the end of April are changing the outlook.
In the report, the economists mentioned that “We no longer expect the Federal Reserve to cut interest rates this year,” pointing out the multiple factors that are currently affecting the country’s economy, such as high tariff rates, the conflict in the Middle East and the increase in energy prices, coupled with the strong investment that some companies are making in artificial intelligence.
The interannual inflation rate is above 3%very far from the Fed’s objectives of 2%, and according to the report, inflation is showing no signs of wanting to fall below that percentage. According to BofA World Study analysts, “core inflation is too high and rising,” Therefore, they assure that a rate cut for 2027 is more likely.
The Federal Reserve last cut interest rates in December of last year, although during that year, the entity felt pressure from the Executive to reduce rates to the lowest levels; nevertheless, They currently remain in the range of 3.5% and 3.75%.
On the other hand, this Friday the Department of Labor published the employment report, which exceeded the expectations of some economists. During the month of April, 115,000 jobs were added, showing stability in the market; However, the unemployment rate remained at 4.3%.
Finally, Deutsche Bank economists also believe that the Fed will keep interest rates in the same range until next year as long as inflation is above its targets.
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