BofA Sees 3 Fed Rate Hikes to 4.5% in 2026 as Inflation Stays Sticky

3 articles · Updated · Fortune · Jun 22

Bank of America now expects the Fed to lift rates three times by 25 basis points each—likely in September, October and December—taking the benchmark range to 4.25%-4.5% from 3.5%-3.75%.
That marks a sharp shift from BofA’s prior call for no moves, driven by last week’s Fed meeting, where half of policymakers penciled in hikes, and Chairman Kevin Warsh’s hawkish comments.
Core PCE could reach 3.5% in May, BofA said, as tariffs, oil-price shocks tied to Trump’s Iran war, fading housing disinflation and sticky services keep inflation above the Fed’s 2% target.
Markets have started to price in that risk: the 10-year Treasury yield rose 4.6 basis points to 4.497% on Monday even as Brent crude fell 4% to $77.29 a barrel.
Alpine Macro disputed the call, arguing easing oil prices, weaker wage growth, small-business strain and AI-led productivity gains make actual Fed tightening unlikely later this year.