Bank of America Sees Three Fed Rate Hikes Coming

Bank of America CEO Brian Moynihan is predicting three Federal Reserve rate hikes this year. According to him, the Fed will raise interest rates by 75 basis points across September, October, and December, pushing the federal funds rate target from its current 3.50%-3.75% range up to 4.25%-4.50%. This forecast is one of the most aggressive calls among major Wall Street banks.

Moynihan cited a stubborn labor market and inflation that continues to run hotter than expected as reasons for the pivot in expectations. An oil price spike has added fuel to an already challenging inflation picture, making it difficult to justify rate cuts.

The Bank of America forecast is influenced by Fed Chair Kevin Warsh's hawkish posture, which suggests the central bank will keep tightening if inflation data warrants it. Recent readings suggest inflation remains a concern, leading some observers on Wall Street to believe this tightening cycle could extend well into 2028.

Rate hikes tend to pull capital away from speculative assets like crypto, which is particularly vulnerable due to its tendency to behave like a leveraged version of tech stocks during macro shifts. Higher borrowing costs can squeeze corporate profits and slow consumer spending, making investors more cautious.