Bank of America, Goldman Sachs, JPMorgan, UBS share predictions about further Fed rate hikes

Bank of America, Goldman Sachs, JPMorgan and UBS have shared their predictions about the Federal Reserve raising interest rates further. Bank of America and Goldman Sachs, for example, now expect the Fed to raise rates three more times this year.

Major banks predict more rate hikes by the Fed

As the US Federal Reserve continues its battle against inflation, several major banks – including Bank of America, Goldman Sachs, UBS and JPMorgan – have shared their predictions about how much more the Fed will raise rates this year.

Goldman Sachs said in a note Thursday that it now expects the U.S. central bank to raise rates three more times this year, after data released Thursday pointed to continued inflation and a resilient labor market. The bank, which previously forecast rate hikes of 25 basis points at Fed meetings in March and May, now expects another rate hike in June. The company’s economists, led by Jan Hatzius, head of the Global Investment Research Division and chief economist, detailed:

In light of stronger growth and firmer inflation news, we are adding a 25 bps (bp) rate hike in June to our Fed forecast, for a peak fund rate of 5.25%-5.5%.

Bank of America Global Research expects three more rate hikes from the Federal Reserve this year. The bank previously said it expected the Fed to raise rates by 25 basis points each at its March and May meetings. Bank of America now expects another rate hike of 25 basis points at the Fed meeting in June, which will push the closing rate to a range of 5.25%-5.5%. The bank stated in a customer note this week:

Rising inflation and solid employment gains mean that the risks to this (only two rate hikes) outlook are too one-sided in our view.

European investment bank UBS also said it expects the Federal Reserve to raise interest rates by 25 basis points at its March and May meetings, allowing the Fed Funds rate to remain in the 5%-5.25% range. While most people don’t expect the Fed to cut interest rates this year, UBS estimated that the US Federal Reserve would cut interest rates at its September meeting. The global investment bank recently wrote in a client note:

We expect the FOMC (Federal Open Market Committee) to turn around and start cutting rates at the FOMC meeting in September.

Meanwhile, JPMorgan Chase has predicted that interest rates will reach 5.1% by the end of June. JPMorgan CEO Jamie Dimon said in an interview with Reuters last week that the Federal Reserve could raise interest rates above 5%. Emphasizing that it is too early to declare victory against inflation, Dimon opined:

It is perfectly reasonable for the Fed to go to 5% and wait a while.

However, if inflation falls to 3.5% or 4% and stays there, “you may have to go higher than 5% and that could affect short rates, longer rates,” the JPMorgan executive warned.

Federal Reserve Chairman Jerome Powell and several other Fed officials have said more rate hikes are needed to curb inflation. A Reuters poll published Tuesday found that 46 of 86 economists have predicted the Federal Reserve will raise interest rates by 25 basis points in March and May.

Do you agree with Bank of America, Goldman Sachs, UBS or JPMorgan on the Fed’s further interest rate hikes? Let us know in the comments below.

Kevin Helms

Austrian economics student Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests are in Bitcoin security, open source systems, network effects and the intersection between economics and cryptography.