AI Spending Fuels 2.8% US Growth, BofA Predicts Two Fed Rate Cuts in 2026

• BofA economist Aditya Bhave forecasts 2.8% US economic growth in 2024, driven by AI investment and easier fiscal/monetary policies.
• AI spending is directly boosting GDP growth through capital expenditure and its impact on the equity market, supporting high-income household spending.
• Despite strong growth, BofA anticipates two Fed rate cuts in 2026, primarily due to potential changes in the US central bank's leadership.
• Bhave notes that the market has already priced in the expected rate cuts, limiting further impact on the US dollar.
• The recent gold rally reflects growing concerns about the long-term value of fiat currencies amid elevated deficits in developed markets.