BofA Sees Three Rate Hikes, Boosting Dollar Strength

Bank of America CEO Brian Moynihan is backing a forecast that calls for three interest rate hikes by the Federal Reserve this year. The predicted hikes would push the federal funds rate target from its current 3.50%-3.75% range up to 4.25%-4.50%. According to BofA's revised outlook, published on June 22, these increases would occur in September, October, and December.

The change of heart at Bank of America is attributed to a labor market that refuses to cool down and inflation running hotter than expected. Oil price spikes have added fuel to the already stubborn inflation picture, making it clear that easing interest rates is no longer necessary. This revised outlook puts BofA in the most hawkish corner of Wall Street.

The forecast didn't emerge in a vacuum. Fed Chair Kevin Warsh's own hawkish posture has been a major factor shaping the bank's revised expectations. Some observers on the Street now believe this tightening cycle could extend well into 2028.