A recession could arrive by year-end as it looks more unlikely the Fed will stick a soft economic landing, BofA says

Bank of America predicts that the Federal Reserve's attempt to bring down inflation will fail by the end of the year because of its tight rope.

The effective federal funds rate was raised by 75 basis points at the meeting of the Fed. Powell said that future rate hikes would be dependent on economic data.

Consumer spending begins to show signs of slowing as inflation remains at elevated levels. Bank of America said that the Fed's statement suggested that they will look through the slowdown in the data because job growth has been "robust" and inflation remains elevated.

BofA expects the Fed to hike rates by another 50 basis points in September and another 25 basis points in November and December. By the end of the year, the fed funds rate could be as high as 3.50%.

The Fed is expected to pause in its interest rate hikes to see how the economy has adapted to the new interest rate environment.

Chair Powell wants inflation to return to 2%. It suggests that the Fed has a high pain threshold. BofA said that this is consistent with his hesitance to say that the economy will not go into recession and that the risk of tightening too much in the short run is less than risk of tightening too little.

It is certain that the US economy will enter a recession by the end of the year.

Our forecast that the economy will go into recession in the second half of this year is supported byPowell's focus on the inflation mandate. The path to a soft landing is too narrow to be our base case.

The US economy could be in a recession. The US GDP fell in the second quarter after a decline in the first.

The official call for a recession is made by the National Bureau of Economic Recession, which takes into account other economic data.