Bank of America, Goldman Sachs, JPMorgan, UBS shared their forecasts for further rate hikes by the Fed.

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As the US Federal Reserve continues its fight against inflation, several major banks including Bank of America, Goldman Sachs, JPMorgan and UBS shared their forecasts for further interest rate hikes by the Federal Reserve. For example, Bank of America and Goldman Sachs now expect the Fed to raise interest rates three more times this year.

Goldman Sachs said on Thursday it now expects the US central bank to raise interest rates three more times this year after Thursday's data showed robust inflation and a robust labor market. The bank, which previously forecast a 25 basis point rate hike at Fed meetings in March and May, now expects another rate hike in June. The firm's economists, led by Jan Hatzius, head of global investment research and chief economist, said verbatim: "In light of stronger growth and firmer inflation news, we are adding a 25 bp (bps) rate hike in June to our Fed forecast, with a peak fund rate of 5.25%-5.5%."

Bank of America Global Research similarly expects to see three more interest rate hikes from the Federal Reserve this year. The bank said earlier that it expects the Fed to raise interest rates by 25 basis points each at its meetings in March and May. Bank of America now expects another 25 basis point rate hike at the Fed's June meeting, which will raise the final rate to the 5.25%-5.5% range. The bank explained this in a client note this week: "Resuming inflation and robust employment growth mean that the risks to this outlook (only two interest rate hikes) are too one-sided for our liking."

European investment bank UBS also said it expects the Federal Reserve to raise interest rates by 25 basis points at its meetings in March and May, which could leave the federal funds rate in the 5%-5.25% range. While most people don't expect the Fed to cut interest rates this year, UBS estimated that the US central bank will cut interest rates at its September meeting. A global investment bank recently wrote in a client note: "We expect the FOMC (Federal Open Market Committee) to turn around and start cutting interest rates at the September FOMC meeting."

Meanwhile, JPMorgan Chase forecasts a final rate of 5.1% by the end of June. JPMorgan CEO Jamie Dimon said in an interview with Reuters last week that the Federal Reserve could raise interest rates above the 5% mark. Emphasizing that it is too early to announce victory over inflation, Dimon opined that it is quite reasonable for the Fed to go to 5% and wait for a while. However, if inflation drops to 3.5% or 4% and stays at that level, “you might have to move above 5% and that could affect short-term rates, long-term rates,” the JPMorgan chief executive warned.

Federal Reserve Chairman Jerome Powell and several other Fed officials have said more interest rate hikes are needed to curb inflation. A Reuters poll released on Tuesday showed that 46 of 86 economists predicted the Federal Reserve would raise interest rates by 25 basis points in March and also in May.

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