economy
Bank of America expects three Fed hikes this year, says inflation is getting 'unambiguously worse'
The bank's economists reversed their position held as recently as last week that the central bank would stay on hold this year.
TL;DR
- Bank of America now expects three interest rate hikes by the Federal Reserve this year.
- This revised forecast is due to stubbornly high inflation and a more aggressive tone from new Chairman Kevin Warsh.
- Economists believe the Fed's inflation problem has become 'unambiguously worse'.
- Supply shocks from the Iran war and tariffs have complicated the inflation outlook.
- Housing disinflation has concluded, and core services inflation remains high.
- Chairman Warsh's recent statements emphasized 'price stability' and suggested policy is not overly restrictive.
- Markets are pricing in at least one rate hike, with a possibility of a second in December.
- Bank of America's call is for the Fed to stay on hold in 2027.