Bank of America predicts the Fed will raise interest rates by 75 basis points in 2026

According to Odaily, due to resilient economic data and rising expectations of a hawkish Federal Reserve under the leadership of new Chair Kevin Warsh, Bank of America predicts that the Fed will raise interest rates by 75 basis points in 2026.

The institution expects the Fed to implement rate hikes in September, October, and December respectively, whereas its previous forecast was for rates to remain unchanged this year. The hawkish outlook from Fed policymakers coincides with a strong labor market and concerns over rising inflation. Analysts at BofA Global Research stated that the June Summary of Economic Projections and comments from Kevin Warsh indicate the Fed's reaction function is more hawkish than anticipated. Following three rate hikes this year, the institution's analysts expect the Fed to hold rates steady in 2027. (Reuters)