Bank of America Global Research has moved up its forecast for the next Federal Reserve interest-rate cut from December to October 2025. This shift reflects growing signs of labor market weakness and cooling economic momentum. BofA remains the only major firm expecting just one 25-basis-point cut this year; others foresee multiple cuts.
The rationale behind BofA’s revision lies in softening employment indicators. Although the official monthly jobs report was delayed by a federal government shutdown, alternative sources point to slower hiring and mixed labor conditions. The CME Group’s FedWatch tool currently prices in a 98 % probability of a rate cut in October, and 90 % for another in December.
That said, BofA warns that the Fed could risk over-easing monetary policy. If the central bank cuts too aggressively, inflation might resurge. Moreover, the ongoing government shutdown has delayed several crucial economic releases—including the jobs and inflation reports—making policy decisions more challenging.
Some analysts caution that one cut in October might not suffice if recession risks intensify. Others project cuts at both upcoming meetings. Regardless, BofA’s adjustment signals that at least part of Wall Street is leaning toward earlier easing than previously expected.
In short, BofA now anticipates the Fed’s first rate cut in October 2025, citing softening labor indicators and slower economic strength. The altered timing underscores growing uncertainty over the appropriate balance between supporting growth and managing inflation.
