Banks Push Fed Rate Cut Forecasts Back

Wall Street is moving the goalposts on interest-rate cuts as stronger jobs data and sticky inflation convince major banks that the Federal Reserve can afford to wait.

Goldman Sachs and Bank of America have joined a widening group of firms that now expect the Fed to hold rates steady until at least the end of the year. Their revised calls reflect a simple message from the latest economic readings: the labor market has not weakened enough, and inflation has not cooled enough, to force the central bank’s hand.

The latest jobs figures appear to have become the tipping point for forecasters who no longer see an early path to lower rates.

The shift matters far beyond trading desks. Delayed rate cuts can keep borrowing costs elevated for households and businesses, from mortgages and credit cards to corporate loans. Investors had spent months searching for the moment when softer data might open the door to easier policy, but reports indicate that recent numbers instead strengthened the case for patience.

The banks’ updated forecasts also underscore a broader change in market thinking. Earlier expectations for quicker easing rested on the idea that growth would slow and price pressures would fade fast enough to let the Fed pivot. Instead, sources suggest that resilience in employment and lingering inflation have made that story harder to defend, prompting forecasters to recalculate the timing of any move.

What happens next will depend on whether upcoming data finally show a cleaner break in inflation or a more obvious loss of momentum in hiring and spending. Until then, the message from some of Wall Street’s biggest names looks clear: the Fed is likely to stay on hold, and that stance will shape markets, consumer finances, and business decisions for months to come.