Recession could force Fed to cut rates, BofA says

Bank of America argued that the Fed will slow down its monetary policy tightening next year to stimulate the shrinking economy and eventually start cutting interest rates, which will lower 10-year Treasury yields. BofA predicted in its report published yesterday that the US economy will enter a recession around the middle of next year, which will force the Fed to cut interest rates towards the end of the year. The report was introduced to the press by BofA's US Interest Rate Strategist Mark Cabana. In his statement here, Cabana also stated that the Fed will continue to raise interest rates until it raises interest rates to 5.25 percent, and that they expect this rate to be reached by increasing interest rates in three meetings until March. Cabana predicted that US 10-year Treasury yields will start to fall from 4 percent in the first quarter of 2023, and that they expect the yield to be around 3.25 percent by the end of 2023. Barclays also predicted a cut According to another bank, Barclays, which expects an interest rate cut in 2023, a “shallow recession” will be seen in the US economy between the second and fourth quarters of next year. Barclays strategists expect a 25 basis point cut from the Fed in November and December next year.