Bank of America adds a 25bps Fed rate hike in January 2027 to its forecast; now expects hikes in December, January and March

Bank of America adds a 25bps Fed rate hike in January 2027 to its forecast; now expects hikes in December, January and March.

A house adding hikes to a Fed forecast is the less common direction of revision in recent cycles, where street changes have more often been about the timing of cuts; calls that run against the prevailing easing or on-hold consensus tend to draw attention precisely because they are contrarian, and their track record is mixed. The mechanism here runs through the front end: a forecast built around hikes at specific meetings prices through the meeting-dated OIS and the very short end of the curve, and a three-hike path is a statement about the terminal rate and inflation persistence, not merely timing. Sell-side Fed forecasts of this kind have historically moved rates only modestly on their own; what has repriced the path is whether one house's view is the leading edge of a broader street shift or an outlier that fades. The follow-ons worth watching are whether peer houses migrate in the same direction over subsequent weeks, and how the call sits against the Fed's own projections and communications, since large gaps between street and dots have tended to close in one direction or the other. The listed geography beyond the US suggests the note frames the call against other major central bank paths, where relative hiking cycles transmit through rate differentials into the dollar crosses. As a single-house forecast revision rather than data or policy, the signal is directional and its weight depends on follow-through.