BofA expects the Fed to raise rates by 25 bps in December and again in March 2027

The call follows a 10-2 Fed vote to hold, with Cook and Hammack backing an increase.

BofA Global Research expects the Federal Reserve to raise rates by 25 bps in December 2026 and by another 25 bps in March 2027. The Fed kept its key rate at 3.75-4.00% on October 28, on a 10-2 vote. Cook and Hammack voted for an increase.

The Fed said inflation remains elevated and economic activity is expanding at a strong pace. Chair Warsh cited double-digit business investment and GDP growth above 3%. He said the Fed is tightening financial conditions. He also said he does not believe in forward guidance outside a crisis, and officials said more data in the coming period will shape later decisions.

BofA is not alone on December. JPMorgan and Principal both expect a hike then. JPMorgan's Yuxuan Tang also expects a second move in the first quarter of 2027, and says that pair of increases would lift 10-year Treasury yields to 5.25-5.5% by midyear. BofA's timetable runs further out than a December-only view.

With the chair giving no direction, long-dated Treasury yields respond to forecasts like these that extend the tightening horizon, more than to any settled view of the committee. The call also runs against the pullback in trader positioning on October 22, which had dropped bets on a 2026 hike. BofA appears to treat the mid-October inflation data as more lasting than that repricing implied.