Bank of America: Fed has no need for recession-sized rate cuts at this time

The Bank of America Securities brokerage team said in a report that the Fed is on track for a September rate cut, but there is no need for an aggressive, recession-inducing scale cut.The rise in the unemployment rate in July came almost entirely from temporary layoffs, suggesting only temporary weakness.Employment could rebound in the August report, and the jobless rate could fall. They said, "The U.S. would not have had a recession without layoffs, which remain extremely low." The Bank of America sees a rate-cutting cycle starting in September, with quarterly cuts of 25 basis points until it reaches a terminal rate of 3.25-3.5 per cent in mid-2026, "Aggressive cuts of 50 basis points or more are made on an emergency basis, as are actions taken in the intervals between meetings, but we're not there yet."