BofA Predicts 3 Interest Rate Hikes Up To 75 BPS, Trump Pressures Oil Companies

• BofA expects the Fed to increase interest rates by 75 bps across three hikes before the year ends.
• Deutsche Bank predicts a 50-bp increase, spread across two hikes over the same period.
• Trump orders the DoJ to launch a probe against oil companies for possible price manipulation.

Bank of America (BofA) has recently given a bleak prediction of what the US Federal Reserve may be up to. Analysts earlier expected at least one interest rate hike this year, but now, it could reach up to three.

Meanwhile, frustrated over the uncontrollable surge in fuel costs for Americans, President Donald Trump called for a probe into oil companies for possible price gouging.

Market Already Pricing an Interest Rate Increase

According to BofA’s Global Research, any discussion about an interest rate cut is now off the table. On the other hand, a hike is already certain, and even the market has started pricing it. Hence, the institution’s latest report pivoted from its previous “no change” assessment to a guaranteed increase before 2026 ends.

The June “Fed dot plot,” a consensus projection from the central bank’s Board of Governors, showed that the median dot for the end of 2026 has ticked upward to 3.8% from 3.4% in March. Analysts expect the adjustment to occur by September.

The group noted that a second rate hike is plausible. A third could happen under a sticky inflation scenario.

Rising Probability of a 75 BPS Interest Rate Hike

BofA has revised its forecast to reflect the Fed’s input. It stated that the Fed will likely move the dial by up to 75 basis points (bps) in the coming months if inflationary pressure persists.

To date, soaring crude oil costs caused headline inflation to resume its climb by 0.5% on the month and 4.2% year-over-year (YoY). The latter represents its fastest spike over the past three years.

The financial institution claimed the Fed will spread the hike across the next three Federal Open Market Committee (FOMC) meetings. That will mean a 25-bp increase in September, October, and December.

The Fed has maintained interest rates at 3.5%-3.75% since December 2025. The realization of BofA’s forecast translates to a rise to a restrictive 4.25%-4.5% range.

Deutsche Bank expressed the same expectations as BofA. However, instead of three, it projected two hikes totalling 50 bps, with the first 25-bp cut taking place in September and the next in December.

Trump Orders DoJ Probe on Oil Companies

In yet another post on Truth Social, Trump announced that he had instructed the Department of Justice to investigate oil companies. With the recent developments of the US-Iran peace deal and supposedly falling crude oil costs, he anticipates lower prices at the gasoline pump by now.

While he didn’t name any companies in his rant, Trump accused them of “gouging” customers, as gasoline prices remain above their average of $2.764 per gallon in January before the escalation of the US-Iran conflict.

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