BofA adds January Fed hike to forecast, says quarterly pace no longer enough
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"After October CPI, the Fed looks further behind the curve on inflation," said economists at BofA, led by Aditya Bhave, adding that the central bank can no longer afford to raise rates at a quarterly pace. Data earlier this week marked a third consecutive monthly upside surprise in inflation, solidifying bets on a December Fed hike, with markets pricing in an 89.7% chance of a 25-basis-point hike and a 10.3% chance of a 50 bp move, per CME FedWatch Tool. Inflation has been rising on the back of higher oil prices amid the Iran war, US President Donald Trump's import tariffs, resilient consumer demand and strong AI-related investment. The Fed raised its benchmark interest rate to a 3.75%-4.00% range in September, marking its first hike in three years. Hawkish comments from Fed policymakers earlier this week also underscored expectations for further policy tightening. Fed Governor Christopher Waller has suggested a 25-basis-point hike next month and a larger increase if price pressures accelerate. "The Fed might delay or skip the last hike if there's a soft patch in the data or significant tightening in financial conditions," BofA strategists said. However, a surge in wage inflation or large annual price resets could push the policy rate above 5%, they added. Goldman Sachs and Deutsche Bank similarly revised their Fed outlooks after this week's CPI data, with Goldman now forecasting hikes in December and March, and Deutsche Bank expecting hikes at each of the Fed's next three meetings. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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