Bank of America says a Federal Reserve rate hike on Wednesday would be unprecedented in the modern era, as markets have priced in only about 10 basis points of tightening, far below the 60% threshold that has preceded every hike since 1994. The Fed’s benchmark rate has been held at 3.5% to 3.75% since December, with inflation remaining above the 2% target and crude oil surging roughly 20% in July before a sharp pullback. BofA rates strategist Mark Cabana said a hike cannot be ruled out, though the bank’s base case is a hold with two dissents from hawkish regional Fed presidents. A move would establish Chair Kevin Warsh’s credibility on independence and inflation, but it would also break a pattern of the Fed never tightening with less than 60% priced in, according to the bank’s analysis of federal funds futures data going back to 1994.
Bank of America CorpBofA's analysis of a potential Fed rate hike is discussed, but the article reports their base case is a hold, making the impact on BofA itself unclear.