BofA delays Fed cuts to 2027

Interest rates are turning into a much longer story than Wall Street thought even a few weeks ago. The new shift is simple but painful — Bank of America now thinks the Federal Reserve will not cut rates at all in 2026. Instead, its economists see the first move in July 2027, with one more cut in September 2027. Goldman Sachs also pushed its own call back, though not as far, and now expects cuts to begin in December 2026. ### What actually changed? The trigger was a run of data that made the Fed’s wait-and-see stance look more durable. Yahoo Finance’s report says BofA called the solid April jobs report the “last straw,” especially after recent hawkish comments from Fed officials. In other words, the economy is not cooling fast enough to force quick relief. (finance.yahoo.com) ### Why does one jobs report matter so much? Because rate cuts usually happen when the Fed sees enough slack in the economy — weaker hiring, softer wages, slower spending, or cleaner inflation progress. But April payrolls came in stronger than expected, which told economists the labor market still has enough momentum to keep inflation pressure alive. If jobs stay firm, the Fed has less reason to rush. (finance.yahoo.com) ### What is BofA saying now? BofA’s new base case is stark. No cuts this year. No cuts next year. Then two quarter-point cuts in 2027 — July and September. That is a huge swing from its earlier call for cuts much sooner. Yahoo Finance notes the bank had previously expected the Fed to cut again as early as September this year before moving that timeline all the way out to 2027. (finance.yahoo.com) ### And Goldman? Goldman moved in the same direction, just less aggressively. Its economists now expect the first cut in December 2026 and another in March 2027, instead of starting in September 2026. So the broad message from two big forecasting shops is the same — policy is likely to stay restrictive longer than markets had been hoping. (finance.yahoo.com) ### Why are oil prices in this story? Because higher energy prices can leak into headline inflation fast. The Yahoo piece ties the latest repricing to inflation risks from higher oil, and it notes Treasury yields jumped as traders digested that possibility. On Monday, the 2-year Treasury yield was up more than 6 basis points to 3.95% in New York trading. That matters because the 2-year yield tends to move with expectations for Fed policy. (finance.yahoo.com) ### Does this mean your mortgage stays high? Not in a clean one-for-one way, but basically yes — borrowing costs are less likely to fall soon. Credit cards, auto loans, home-equity loans, and a lot of corporate borrowing track the “higher for longer” idea more directly than the average 30-year mortgage does. Even mortgages, though, tend to feel the effect when bond yields stay elevated and the whole rate curve reprices. (finance.yahoo.com) ### Is BofA now the consensus? Not exactly. The Fed’s own March projections still pointed to one cut in 2026 and another in 2027, so BofA is now more hawkish than that median view. Goldman sits closer to the middle. The point is not that everyone agrees on the exact meeting date — it’s that the center of gravity has shifted later. (finance.yahoo.com) ### So what’s the real takeaway? The Fed-cut story did not disappear. It just got pushed far out on the calendar. If BofA is right, the practical effect is months of extra pressure on borrowers and companies that were counting on cheaper money sooner. That is the part that matters — not the forecast itself, but the delay. (finance.yahoo.com)