BofA Global Research expects two quarter-point Fed rate rises, in December and March

The Federal Reserve held its key rate at 3.75 to 4.00 per cent on October 28, with two members voting for an increase.

BofA Global Research expects the Federal Reserve to raise its key rate by a quarter point in December 2026 and again in March 2027.

The Fed kept the rate at 3.75 to 4.00 per cent on October 28 on a 10-2 vote. JPMorgan and Principal also expect a rise in December.

JPMorgan's Yuxuan Tang, head of Asia rates and FX strategy, expects a hike in December and another in the first quarter of 2027. He says that path would push the 10-year Treasury yields to 5.25 to 5.5 per cent by midyear.

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 per cent at his press conference. He said he does not believe in forward guidance outside a crisis, and that the Fed is tightening financial conditions. Officials said incoming data will help shape future decisions. The Fed will also move to eight meetings next fall, one without a rate vote and one focused on strategy.

BofA's call comes after the 10-2 hold left the hawkish dissent unresolved. Warsh has declined to signal direction and points to future data instead. That leaves long-dated Treasury yields exposed to forecasts like this one, which push the hiking horizon further out, rather than to any settled view on the committee.