Why have Goldman Sachs and Bank of America delayed their forecasts for Federal Reserve interest-rate cuts?

Goldman Sachs and Bank of America delayed their rate-cut forecasts because 'the data simply don’t warrant cuts this year'—specifically, core inflation is 'too high, and moving up,' and the 'solid April jobs report was the last straw,' especially amid 'hawkish Fedspeak.' As a result, BofA now expects the first cut in July 2027 (up from September 2024), and Goldman pushed its call to December 2026 (from September 2024).

What market and policy signals are reinforcing expectations of a prolonged Fed pause—or even future hikes?

Signals include rising oil prices stoking inflation amid Iran-related geopolitical tensions, a 'tenuous ceasefire... on massive life support,' higher Treasury yields (e.g., two-year yield up to 3.95%), weak demand at the $58 billion three-year Treasury auction, hawkish dissent from two Fed officials who said the next move 'could be an increase,' and BofA strategists stating the risk of Fed hikes is 'underpriced'—leading them to recommend selling two-year Treasuries.

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