Fed's Next Move: Markets Underestimate Despite Decline in Downside Economic Risks

Bank of America Global Research has warned that markets are underestimating the Federal Reserve's next move, suggesting that either the Fed's rate hikes aren't over yet, or cuts will be deeper than markets expect. The bank's report suggests that the market tends to underestimate actual Fed policy ahead of both hiking and cutting cycles. The Fed is currently expected to pause in its interest rate increases next month, before cutting rates twice before the end of 2023, according to market pricing.