BoFA, Citi expect multiple 50-bps Fed hikes this year as inflation bites

© . FILE PHOTO: A Bank of America sign is displayed on a building in downtown Los Angeles, California, Jan. 15, 2014. REUTERS/Mike Blake LONDON/NEW YORK () – Bank of America (NYSE:) (BofA) and Citi have joined a small but growing number of top investment banks calling for more aggressive US Federal Reserve rate hikes against a backdrop of rising inflation data and aggressive comments from policymakers. The BoFA now expects two increases of 50 basis points each at the Fed’s June and July meetings, with the “risk” that those expectations will be extended to May and June respectively. Citi, on the other hand, sees increases of 50 basis points in May, June, July and September. The bank also expects a 25 basis point tightening in October and December. “Our economists now also expect the Fed to continue extending each meeting until they reach a 3-3.25% range by May ’23,” economists at the bank said. “This represents a 25 bp higher end rate reached 7 months earlier than previously predicted.” Money markets are assigning an 80% chance of a 50 bps rate hike in May and about 200 basis points in cumulative hikes by the end of 2022 after the Fed hiked rates by a quarter point last week. Goldman Sachs (NYSE:) expects as many as seven rate hikes in 2022 and as many as five in 2023. Citi expects the Fed to continue raising rates in 2023, reaching a policy rate target range of 3.5-3.75% . “Recent statements from the Fed have raised our belief that Chairman (Jerome) Powell and the broader committee will support a 50bp rate hike in May, despite the balance sheet cut announced at the same meeting,” Citi said in its latest note. “It appears that 50 bps would have been delivered in March had there not been an acute uncertainty associated with geopolitical tensions,” Citi said. Disclaimer: Fusion Media would like to remind you that the data on this website is not necessarily real-time or accurate. All CFDs (Stocks, Indices, Futures) and Forex prices are not provided by exchanges but rather by market makers, and therefore prices may not be accurate and may differ from the actual market price meaning prices are indicative and not suitable for trading purposes . Therefore, Fusion Media does not bear any responsibility for any trading losses that you may incur as a result of using this data. Fusion Media or anyone associated with Fusion Media accepts no liability for any loss or damage resulting from reliance on any information, including data, quotes, charts and buy/sell signals on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.

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