BofA Global Research: Adding another hike to our Fed call
13 Nov 2026 Key takeaways We now expect 25bp hikes at the next three Fed meetings, for a terminal rate of 4.5-4.75%. Oct CPI confirmed that the Fed is behind the curve on inflation. Quarterly hikes won't be enough to catch up. Today's events: Oct PPI and comments from Fed's Jefferson, Logan, Bowman, Collins, and Daly. Time, time is not on your side We have added a 25bp hike in Jan '27 to our Fed forecast. We now expect hikes at the next three meetings (Dec, Jan, Mar), for a terminal rate of 4.5-4.75%. After Oct CPI, the Fed looks further behind the curve on inflation. It no longer has the luxury of hiking at a quarterly pace. Risks to our new call are balanced. The Fed might delay or skip the last hike if there's a soft patch in the data or significant tightening in financial conditions. A surge in wage inflation or large annual price resets could push the policy rate above 5%. What about 50 in Dec? A 50bp hike in Dec isn't our base case, but a few clients have asked what would get it over the line. Our response is that "everything would have to break in favor of the hawks". For example, the Fed might hike by 50bp if we get most or all of the following: i) Oct core PCE inflation cl
13 Nov 2026 Key takeaways We now expect 25bp hikes at the next three Fed meetings, for a terminal rate of 4.5-4.75%. Oct CPI confirmed that the Fed is behind the curve on inflation. Quarterly hikes won't be enough to catch up. Today's events: Oct PPI and comments from Fed's Jefferson, Logan, Bowman, Collins, and Daly.
Time, time is not on your side We have added a 25bp hike in Jan '27 to our Fed forecast. We now expect hikes at the next three meetings (Dec, Jan, Mar), for a terminal rate of 4.5-4.75%. After Oct CPI, the Fed looks further behind the curve on inflation. It no longer has the luxury of hiking at a quarterly pace.
Risks to our new call are balanced. The Fed might delay or skip the last hike if there's a soft patch in the data or significant tightening in financial conditions. A surge in wage inflation or large annual price resets could push the policy rate above 5%. What about 50 in Dec?
A 50bp hike in Dec isn't our base case, but a few clients have asked what would get it over the line. Our response is that "everything would have to break in favor of the hawks". For example, the Fed might hike by 50bp if we get most or all of the following: i) Oct core PCE inflation close to 40bp, ii) a 4.0% u-rate in Nov, iii) 0.4% wage inflation in Nov, iv) indications that other FOMC participants, particularly the doves, are on board with a 50bp hike, and v) market pricing moving up to at least a 50% chance of 50bp. Aditya Bhave -- US Economist - BofAS