BofA Drops GDP Forecasts, Sees QE Tapering by March

Citing low inflation, BofA experts believe the Fed's quantitative easing program is likely to slow down at a tepid pace.

"We now think tapering is slightly more likely to start in March rather than January. We think QE will not end until December [2014]," explained the economist.

Moreover, the group doesn't see the first hike in interest rates coming until the first quarter of 2016.

"We are similarly optimistic on the global outlook," Harris said. The bank expects "trend-like growth in 2014 as Europe slowly exits its recession and as the global manufacturing cycle picks up. As in the U.S., inflation is likely to remain quite subdued."

As for how inflation can drop as growth rises, he notes that inflation "normally doesn't accelerate until growth has been strong enough for long enough to create capacity pressure. Indeed, at the beginning of economic recoveries, inflation tends to fall even though growth is very strong."

Furthermore, in the current cycle, structural headwinds and policy shocks have "delayed a normal recovery," says Harris. "Hence, four years into the recovery, there is still spare capacity and disinflationary pressure."