As we know, the FED did not change its interest rates during its first meeting of the Federal Open Market Committee (FOMC) under Chairman Kevin Warsh last week. The FED unanimously kept its key interest rate stable between 3.50 and 3.75 percent, in line with expectations.
Growing inflation concerns stemming from the U.S.-Iran conflict have reduced the likelihood of a Fed interest rate cut to almost zero, while also increasing 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 forecasts upwards.
As a result, BofA revised its forecast for Fed interest rate hikes, saying it now expects three 25 basis point hikes in September, October and December 2026.
This marks a significant change from the bank’s previous forecast that the Fed would keep interest rates steady for the remainder of the year.
Recent statements by FED officials, indicating a more hawkish stance, and increased geopolitical risks in the Middle East were cited as factors influencing the bank’s revised forecasts.
However, some large institutions still expect interest rate cuts. In this regard, Wall Street giant Citi predicts that the Fed will cut interest rates during this year. CitiGroup previously predicted the Fed’s first interest rate cut for September, but revised that forecast to October.
Citi now expects the Fed to cut interest rates by 25 points three times: in October and December 2026, and again in January 2027.
Finally, Tai Hui, chief market strategist for Asia at JPMorgan Asset Management, said he expects the Fed to keep interest rates stable in 2026.
*This does not constitute investment advice.
