BofA Warns of Fed Rate Hikes Above 5%

Investors need to prepare for the possibility that the Federal Reserve raises interest rates above 5%, according to Bank of America Corp. strategists.

The team, including Mark Cabana and Meghan Swiber, believes that the market is underestimating the endpoint of the current Fed hiking cycle, which started this week.

BofA sees potential for overnight borrowing costs to revisit highs from 2022-2023, when the target rate reached as much as 5.5%.