Bank of America changed its Federal Reserve forecast and now expects three quarter-point rate hikes this year, lifting the benchmark rate to 4.25%–4.5% from the current 3.5%–3.75% range. The bank’s previous base case was for rates to remain steady through the year, but last week’s FOMC meeting and hawkish remarks from new Fed Chairman Kevin Warsh prompted the revision. BofA sees the first increase in September, followed by moves in October and December, reversing the last cut made in December 2025. The analysts cited worsening inflation, with core PCE potentially reaching 3.5% in May, and noted that the Fed is losing patience after supply shocks and sticky core services. While Wall Street has begun pricing in a more hawkish stance, Alpine Macro’s chief global strategist argued that rate hikes remain unlikely, pointing to falling oil prices and weakening wage growth.
Bank of America CorpBofA's own forecast revision is the subject; rate hikes generally benefit banks' net interest margins, but the article does not state the impact on BofA's stock.
Alpine Macro's strategist is quoted arguing against rate hikes, but the firm is not directly affected by the news.