Bank of America has projected that the Federal Reserve will raise interest rates by 75 basis points in 2026, marking a significant shift toward a hawkish policy trajectory.
The forecast, released Monday, cites resilient economic data and growing expectations that new Federal Reserve Chair Kevin Warsh will pursue a more aggressive tightening cycle than previously anticipated.
375%, a decision that came with a 6-3 split vote, indicating internal disagreement on the policy path.
The prediction stands in stark contrast to the central bank’s recent actions.
During its April 2026 meeting, the Federal Reserve maintained the federal funds rate target at 4.375%, a decision that came with a 6-3 split vote, indicating internal disagreement on the policy path.
BofA’s latest outlook suggests that the balance of power within the FOMC may be shifting decisively toward hawks under Warsh’s leadership.
This revised forecast implies that markets may need to repricing the probability of rate hikes later this year.