Bank of America Now Expects Three Fed Rate Hikes This Year. A Month Ago It Forecast Zero
Bank of America said stubborn inflation and hawkish signals from new Chair Kevin Warsh could push the Federal Reserve to lift rates 75 basis points.
- On Monday, Bank of America analysts reversed their outlook, now predicting the Federal Reserve will raise interest rates three times this year. This hawkish shift targets a benchmark rate of 4.25%-4.5% by year-end.
- The pivot follows the June Federal Open Market Committee meeting, where Fed Chair Kevin Warsh struck a hawkish tone signaling policymakers are losing patience with inflation. Persistent supply shocks and tariffs have caused core prices to surge.
- Economist Aditya Bhave projects three straight 25 basis point hikes in September, October, and December, a stance more aggressive than current market pricing. This reframes the bank's approach from 'risk management' to active supply shock management.
- Bond markets reacted Monday, as the Treasury yield climbed amid the hawkish outlook, even though the Fed held rates steady last week. Officials remain sensitive to stubborn core services inflation.
- Despite the revision, Chen Zhao of Alpine Macro noted that odds of actual tightening remain very low, suggesting inflation may decline later this year as transitory supply shocks pass through the system. This skepticism contrasts with BofA's hawkish call.
13 Articles
13 Articles
Bank Of America Predicts 3 Fed Rate Hikes In 2026 — What It Means For Your Wallet
Bank of America has revised its outlook and now expects the Federal Reserve to raise interest rates three times in 2026. The bank projects 25-basis-point increases in September, October, and December, which would lift the federal funds rate from its current 3.50%-3.75% range to 4.25%-4.50%, per Fortune. This marks a sharp reversal from earlier 2026 outlooks that called for rate cuts. Bank of America cited “unambiguously worse” inflation data, re…
The Bank of America expects three interest rate increases by the US Federal Reserve (Fed) in 2026, before a prolonged pause. The increases would be 25 basis points and would take place in September, October and November, reaching 4.50%. However, factors such as a strong slowdown in job creation, weak core inflation numbers, or a large stock liquidation could make this scenario unfeasible. Bank of America analyst Aditya Bhave, quoted by the finan…
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