BofA shifts Fed call to rate hikes in December 2026 and March 2027

Bank of America has revised its Federal Reserve forecast to call for interest rate hikes in December 2026 and March 2027, shifting from a prior outlook that anticipated easing. The reported change pushes the expected turning point in policy further out and implies that the policy rate will be raised rather than cut, a repricing that transmits through the rate differential channel by lifting expected short-term yields and tightening financial conditions. Assets most exposed include Treasury front-end and belly yields, rate-sensitive equities, and the U.S. dollar, which tends to firm when the expected path of U.S. policy rates rises relative to peers. For Bank of America (BAC), the implications run through net interest margin expectations, since a higher-for-longer or tightening path can support deposit-spread and asset-yield dynamics, while the offsetting risk is slower loan growth and potential credit stress if higher rates weigh on borrowers. Traders will watch the next Consumer Price Index release and the Federal Reserve's updated Summary of Economic Projections for signs of whether inflation trends justify a tightening bias.

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