financetom
Economy
financetom
/
Economy
/
BofA forecasts 75 bps of rate hikes in 2026 on labour market resilience, new Fed chair
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
BofA forecasts 75 bps of rate hikes in 2026 on labour market resilience, new Fed chair
Jun 22, 2026 4:50 AM

June 22 (Reuters) - BofA Global Research expects the Federal Reserve to hike interest rates by 75 basis points in 2026, it said on Monday, citing resilient economic data and rising expectations of a hawkish Fed under new Chair Kevin Warsh.

The brokerage expects the U.S. central bank to raise rates in September, October, and December, compared with its prior forecast for no change this year.

BofA's view is contrary to current 2026 outlooks of top Wall Street brokerages and comes after the Fed left its benchmark rate unchanged earlier this month, even as almost half of Fed policymakers indicated that they now expect rates to rise this year.

The policymakers' more hawkish outlook is accompanied by strength in the labour market and elevated inflation concerns.

"June Summary of Projections and Warsh's comments indicate that the Fed's reaction function is much more hawkish than we thought," analysts at BofA said in a note.

In contrast to BofA's call, markets are pricing in 42 bps of hikes in 2026, according to LSEG data.

After three rate hikes this year, BofA analysts expect the central bank to keep interest rates on hold in 2027.

"Inflation is likely to remain sticky, keeping the real policy rate from becoming overly restrictive," they said.

Brokerages including BNP Paribas and Macquarie are also among the minority that expect the central bank to start hiking rates this year.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
Fed 'in a fog' as it heads toward another rate cut
Fed 'in a fog' as it heads toward another rate cut
Oct 28, 2025
WASHINGTON (Reuters) -The Federal Reserve is expected to cut interest rates by a quarter of a percentage point on Wednesday as policymakers steer the U.S. economy based on limited data that has nevertheless kept concerns about the strength of the job market top of mind. Economists polled by Reuters were nearly unanimous in expecting the U.S. central bank to reduce...
Trump again targets Fed's Powell on interest rate cuts
Trump again targets Fed's Powell on interest rate cuts
Oct 28, 2025
SEOUL (Reuters) -U.S. President Donald Trump complained on Thursday about the Federal Reserve, once again taking aim at central bank chief Jerome Powell for perceived delays in cutting interest rates. Jerome 'Too Late' Powell, Trump said in a speech in the South Korean city of Gyeongju, prompting laughter from an audience of corporate executives and leaders gathered for the CEO...
Caterpillar's third-quarter profit drops on weak US construction activity, tariffs
Caterpillar's third-quarter profit drops on weak US construction activity, tariffs
Oct 29, 2025
(Reuters) -Caterpillar ( CAT ) reported a lower third-quarter profit on Wednesday, hit by weak construction activity in the U.S. and tariffs imposed by the Trump administration. The company, seen as a bellwether for the global industrial economy, reported an adjusted per share profit of $4.95, down from $5.17 a year earlier. (Reporting by Nandan Mandayam and Nathan Gomes in Bengaluru;...
Rate Cuts A Foregone Conclusion? Polymarket Bettors Convinced Jerome Powell-led Federal Reserve Will Slash On Wednesday
Rate Cuts A Foregone Conclusion? Polymarket Bettors Convinced Jerome Powell-led Federal Reserve Will Slash On Wednesday
Oct 29, 2025
Cryptocurrency punters are largely confident that the Federal Reserve will slash interest rates by 25 basis points on Wednesday. A Done Deal? As of this writing, the odds of a quarter-point reduction stood at 98% on the decentralized prediction platform Polymarket. On the other hand, there was only a 1% chance that the rates would stay at their current range...
Copyright 2023-2026 - www.financetom.com All Rights Reserved