Bank of America CEO Brian Moynihan is betting that the Federal Reserve isn’t done tightening. He’s backing a forecast that calls for three rate hikes before the year is out, a stance that puts BofA squarely in the most hawkish corner of Wall Street.
The prediction: 75 basis points of increases spread across September, October, and December, pushing the federal funds rate target from its current 3.50%-3.75% range up to 4.25%-4.50%.
From rate cuts to rate hikes: BofA’s U-turn
Bank of America didn’t start the year expecting hikes. The firm initially anticipated flat interest rates, with some on the Street even pricing in cuts. Then the data arrived, and plans changed.
Moynihan pointed to two culprits for the pivot: a labor market that refuses to cool down and inflation that keeps running hotter than expected. An oil price spike added fuel to an already stubborn inflation picture, making the case for easing essentially evaporate.
