(Bloomberg) -- JPMorgan Chase & Co. and Bank of America Corp. are now forecasting a quarter-point reduction in interest rates when the Federal Reserve next meets in November, giving up on their calls for a larger cut after labor-market data offered evidence of US economic resilience.
JPMorgan chief US economist Michael Feroli and Bank of America economist Aditya Bhave both pointed to Friday’s employment report as the impetus to rein in their expectations for the central bank’s easing path. Given the central bank’s 50-basis-point move in September, they see a solid jobs market as reason for the Fed to take a more measured approach.
“Today’s report should also make the Fed’s job easier,” Feroli wrote in a note. It would take a “rather large” in the lead-up to the Fed’s next gathering — with a key reading of inflation next week and one more jobs report in early November — to move policymakers off “this path of gradual rate normalization.”
Bhave at BofA, meantime, said the data since the Fed’s last rate announcement has been “remarkably strong,” meaning another half-point cut isn’t warranted.
“The risks to this figure are to the upside, given the string of data pointing to stronger productivity growth,” Bhave wrote in a note.
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