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Banks (Finance)

Bank of America Analysts Predict One Last Interest Rate Hike in November

Strategic Insights

— 1 min read

Bank of America analysts have forecasted a one last interest rate hike in November, citing upside risks to food and energy prices and a resilient economy as main drivers. The analysts believe the Federal Reserve will hand down a single 25 basis point hike, with the timing being a close call between September and November. The updated forecast was driven by the July Consumer Price Index (CPI) report, which the analysts considered "benign." Recent Fed speakers have also been dovish on balance, suggesting that the Fed is done raising rates. A November rate hike would allow the central bank to fine-tune its policy path and assess the trajectory of the economy.

Key Takeaways:

  • Bank of America analysts predict one last 25 basis point interest rate hike in November, rather than September.
  • The July CPI report was a key factor in the updated forecast, with the analysts describing it as "undeniably encouraging."
  • Recent Fed speakers, including Goolsbee, Bostic, and Harker, have been dovish on balance, suggesting that the Fed is done raising rates.
  • A November rate hike would give the Fed more time to assess the trajectory of the economy and fine-tune its policy path.
  • The analysts still expect the Fed to start cutting rates in June 2024 at a pace of 25 basis points per quarter.

Statistics:

  • 25 basis points: The expected size of the one last interest rate hike.
  • 2%: The target inflation rate set by the Federal Reserve.
  • 25 basis points: The expected pace of rate cuts in June 2024.
  • July: The month in which the "benign" Consumer Price Index (CPI) report was released.
  • September and November: The two possible dates for the one last interest rate hike.
  • 3: The number of dovish-fed speakers, including Goolsbee, Bostic, and Harker, who suggested that the Fed is done raising rates.

Sources:

  • Bank of America analysts (no specific date or publication mentioned in the original text)
  • Emily Jarvie (emily.jarvie@proactiveinvestors.com)
  • Follow her on Twitter @emilyjjarvie

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