Bank of America Makes a Sharp U-turn: How Many Times and in Which Months is the Fed Expected to Raise Interest Rates?

As is known, the FED did not change interest rates at its first Federal Open Market Committee (FOMC) meeting under the chairmanship of Kevin Warsh last week. The FED unanimously kept the policy interest rate stable at 3.50-3.75 percent, in line with expectations.

Increased inflation concerns stemming from the US-Iran conflict have reduced the likelihood of a Fed interest rate cut to almost zero, while also raising the possibility of an interest rate hike.

According to Forbes, Bank of America (BofA), one of the giants of the banking sector, has revised its forecast upwards.

Accordingly, BofA has revised its forecast for the Fed’s interest rate hikes, stating that it now expects three 25 basis point increases in September, October, and December 2026.

This marks a significant shift from the bank’s previous forecast that the Fed would keep interest rates steady for the remainder of the year.

Recent statements from FED officials, indicating a more hawkish stance, and increasing geopolitical risks in the Middle East were cited as factors influencing the bank’s forecast revision.

However, some top institutions are still expecting interest rate cuts. In this regard, Wall Street giant Citi predicts that the Fed will cut interest rates sometime this year. CitiGroup had previously predicted the Fed’s first interest rate cut for September, but has revised this prediction to October.

Citi now forecasts that the Fed will cut interest rates by 25 basis points three times: in October and December of 2026, and again in January of 2027.

Lastly, Tai Hui, Chief Market Strategist for Asia at JPMorgan Asset Management, stated that they expect the Fed to keep interest rates stable in 2026.

*This is not investment advice.