News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Bank of America says it sees seven Fed rate hikes this year

01/28/2022 | 10:25am EDT
FILE PHOTO: A Bank of America logo is pictured in the Manhattan borough of New York City, U.S.

(Reuters) - Bank of America economists said on Friday that they expect the Federal Reserve to hike rates by 25 basis points seven times this year, beginning in March, adopting one of the most aggressive views on Fed tightening among major banks.

Economists have scrambled to update rate hike expectations since the Fed on Wednesday said it was likely to hike interest rates in March and reaffirmed plans to end its bond purchases that month in what its chief Jerome Powell pledged will be a sustained battle to tame inflation.

"The Fed has all but admitted that it is seriously behind the curve," the Bank of America economists said in a report, adding that the aggressive tightening "should affect the economy with a lag, weighing on 2023 growth."

Other banks have also increased their expectations on rate hikes. For example, Deutsche Bank expects five increases this year, TD Securities sees four, and BNP Paribas forecasts as many as six.

Fed funds futures traders are pricing in almost five interest rate increases by year-end, with four likely by September.

Bank of America raised its 2022 fourth quarter forecast on the core personal consumption expenditures (PCE) index to 3.0%, from 2.6%, saying that "an even faster-than-expected drop in unemployment and longer-than-expected supply disruptions mean more inflation."

It also cut its 2022 U.S. economic growth forecast to 3.6%, from 4.0%, noting that "a combination of supply and demand factors points to weaker growth this year."

Bank of America said it now expects a peak fed funds rate of 2.75% to 3.0%.

(Reporting By Karen Brettell; Editing by Chizu Nomiyama and Tomasz Janowski)

© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
BANK OF AMERICA CORPORATION 0.95% 37.02 Delayed Quote.-16.79%
Latest news "Economy & Forex"
04:27aUAE's ADQ to allocate $10 billion for investments with Egypt, Jordan - WAM
04:11aNepal plane goes missing in bad weather with 22 on board -officials
04:00aShanghai takes further steps towards reopening, Beijing eases COVID curbs
03:23aQatar central bank governor expects GDP growth of 3.5% in 2022
03:16aShanghai to cancel "unreasonable restrictions" to resume work - official
03:10a'Message to the world' - Lithuanians fundraise to buy drone for Ukraine
02:50aMonsoon rains lash India's Kerala coast, two days ahead of usual
02:28aQatar central bank governor expects GDP growth of 3.5% in 2022
02:23aAustralia PM says Pacific leaders 'positive' on his new push
02:21aAustralia PM says Pacific leaders 'positive' on his new push
Latest news "Economy & Forex"