Bank of America forecasts Fed rate hikes in December 2026, January and March 2027
Bank of America Global Research now predicts three Federal Reserve rate hikes: in December 2026, January 2027, and March 2027, including a 25-basis-point increase in January.
This revised forecast comes as the Federal Reserve's current federal-funds target rate stands at 3.75%–4.00%, with the effective rate at 3.88%. The adjustment follows the latest economic indicators showing consistent inflation and robust employment figures.
Market Impact
Market participants are likely to interpret this forecast as an indicator of a more aggressive approach by the Fed in response to persistent inflation pressures. The updated forecast suggests a higher terminal policy rate path than previously expected.
What's Next
The Federal Reserve's upcoming statements and economic projections could provide further insight into the likelihood of additional rate hikes. Any significant changes in key economic indicators, such as inflation and employment data, will be closely monitored as they could influence the Fed's policy decisions.
Comments from Federal Reserve officials, particularly regarding their assessment of inflationary pressures and economic conditions, will be crucial in shaping market expectations for future rate adjustments.
Related
