BofA Shifts Fed View to Three Rate Hikes This Year From Hold

Bank of America has revised its forecast for the Federal Reserve’s benchmark interest rate this year, shifting to a call for three rate hikes from its previous expectation of no change.

Crypto-focused media outlet BlockBeats reported on June 22 that BofA now expects the Fed to raise rates three times this year. The change suggests Wall Street is increasingly bracing for a more aggressive tightening path from the central bank.

BofA economists had previously projected the Fed would leave rates unchanged this year. They changed that view after recent economic data stayed firm and the Fed’s communication turned more hawkish.

The bank also sees a greater chance that the Fed will respond more aggressively to inflation.

Even so, the three-hike forecast remains a minority view in the market. About 19% of investors now expect three rate increases this year, up sharply from 3% a week earlier.

Two rate hikes remain the market’s base-case scenario for this year.

Rising expectations for higher rates could pressure risk assets, including Bitcoin. Sentiment toward risk assets has partly recovered as geopolitical risks in the Middle East eased, but market volatility is expected to continue as the prospect of Fed tightening comes back into focus.