Bank of America is cautioning that the Federal Reserve should resist the urge to lower interest rates at its September policy meeting, arguing that recent economic data doesn’t justify an early start to easing.

In a note to clients, the bank said policymakers favouring cuts are underestimating the impact of a labour supply shock and the persistence of inflation, which remains above the Fed’s 2% target. The latest tariff hikes, it warned, could deliver “a larger and more persistent shock” to prices.

• “Cutting in September may risk starting the easing cycle without evidence that inflation has peaked,” the bank wrote, adding that it still does not expect any rate reductions this year.

BofA noted that the downward revision to US nonfarm payrolls raises the chances of what it calls “bad cuts” — rate reductions prompted by labour market deterioration rather than a successful inflation fight.