Goldman, BofA delay Fed cuts

Wall Street’s Fed story just got a lot less friendly. Goldman Sachs and Bank of America both pushed back their forecasts for when the Federal Reserve will start cutting rates, and that is not a small tweak. It means two big banks looked at the same economy — sticky inflation, pricier energy, and a labor market that still will not crack — and decided the Fed can wait much longer. Goldman now expects its first cut in December 2026. BofA does not expect any cut at all this year. ### Why did the forecasts move now? The immediate trigger was the April jobs report. Employers added more jobs than expected, and the unemployment rate held at 4.3%. That told economists the labor market is still firm enough that the Fed does not need to rush in to support growth. When hiring stays solid, the central bank has more room to keep policy tight. (newsbreak.com) ### Why do energy prices matter so much? Because the Fed cares about inflation persistence, not just one bad print. Higher energy prices do not stay neatly inside gasoline and utilities. They bleed into shipping, airfares, food, and a lot of business costs. The recent Middle East war has pushed energy prices higher for about 10 weeks, and banks now think that shock is large enough to slow the path back toward 2% inflation. (newsbreak.com) ### What exactly did Goldman change? Goldman pushed its first expected cut from September 2026 to December 2026, and it now sees a second cut in March 2027. The bank also laid out the catch clearly — if the labor market does not weaken enough this year, even those cuts could slide further into 2027. So this was not just a calendar adjustment. It was a signal that Goldman thinks the easing cycle is getting less certain. (newsbreak.com) ### What exactly did BofA change? BofA went further. It now expects the Fed to stay on hold for the rest of 2026 and only start cutting in 2027, with two 25-basis-point moves in July and September. That is a more hawkish call than Goldman’s, and it tells you how far the debate has shifted. A few months ago the question was how many cuts. Now, for some forecasters, the question is whether 2026 gets any at all. (newsbreak.com) ### Is this just Wall Street, or is the Fed thinking that way too? The Fed’s own posture already leaned cautious. It held rates steady at its April 29 meeting, and Reuters’ summary notes that traders expect the policy rate to stay in the 3.50% to 3.75% range through year-end. Back in March, Fed officials published projections showing they were still mapping policy against inflation, unemployment, and growth under unusually uncertain conditions. (newsbreak.com) Basically, the banks are moving closer to the Fed’s wait-and-see stance, not fighting it. ### Why does this matter outside bond markets? Because delayed cuts keep borrowing costs higher for longer. That hits mortgages, credit cards, corporate debt, and the valuation math behind stocks and commercial real estate. The change is also psychological — investors have spent years looking for the next easing cycle. When major banks start saying “not yet” again, markets have to reprice a lot of assumptions. (newsbreak.com) ### What’s the bottom line? Two big banks just told clients the Fed is probably not coming to the rescue soon. As long as jobs stay firm and energy keeps inflation sticky, the path of least resistance is delay — and maybe more delay after that. (newsbreak.com)