Staff Reporter

Bank of America has updated its outlook on the Federal Reserve’s monetary policy, stating that the cycle of interest rate cuts has concluded.

In a note released shortly after the latest jobs report, the bank’s U.S. economics team remarked, “Given a resilient labor market, we now think the Fed cutting cycle is over.”

This revised forecast follows a strong jobs report for December, which revealed a significant increase in payrolls alongside a slight drop in the unemployment rate to 4.1%.

Economists at BofA emphasized the strength of the labor market as a crucial factor in their reassessment, indicating that current economic conditions do not support the need for further easing by the Federal Reserve.

A recent report indicates that inflation continues to exceed the Federal Reserve’s target. The central bank’s projections for 2025 suggest higher inflation expectations, with risks leaning toward the upside.

Bank of America does not expect next month’s revisions to have a significant impact on the Fed’s decisions. The firm believes the labor market has stabilized following a period of volatility during the summer and early fall. They anticipate that the revisions will likely reflect a downward level shift rather than a change in the overall trend.

Economists pointed out that both market-based inflation and core PCE have plateaued at levels inconsistent with the Fed’s targets, providing little comfort for a policy shift.

“Economic activity is robust. We see little reason for additional easing,” they concluded.