The expectation of the Federal Reserve raising interest rates in 2026 suddenly heats up: the Bank of America's BofA has sharply turned hawkish, predicting three interest rate hikes within the year! Recently, the market's expectation of the Federal Reserve raising interest rates has significantly increased, directly triggering fluctuations in the stock market, bond market, and cryptocurrency market. The Bank of America's team of economists released their latest report on June 22, shifting significantly from "no interest rate hike within the year" to predicting three interest rate hikes in 2026, with a cumulative increase of+75bp. This viewpoint differs significantly from the current market pricing and has become the focus of market attention. 1、 2026 interest rate hike schedule (Bank of America forecast) Bank of America expects the Federal Reserve to raise interest rates by 25bp at each of the following three points: September: First interest rate hike (+25bp) October: Second interest rate hike (+25bp) December: Third interest rate hike (+25bp) Accumulated:+75bp 2、 Changes in the federal funds rate range Current range: 3.50% -3.75% (has remained inactive for the fourth consecutive time in June) • Prediction range: 4.25% -4.50% This means that the policy interest rate will rise by 75 basis points from the current level and enter a more restrictive region. 3、 Three core reasons for Bank of America to raise its forecast+background signals The Bank of America team believes that the following factors have driven upward adjustments in inflation and policy paths: one ️⃣ Inflation clearly worsens (inflation data repeatedly exceeds expectations) two ️⃣ The job market is resilient (the labor market remains strong, with low unemployment rates) three ️⃣ Rising energy prices (geopolitical factors push up energy costs such as oil prices) Important background signals: one ️⃣ Newly appointed Federal Reserve Chairman Kevin Warsh is seen by the market as a hawkish figure two ️⃣ June was his first interest rate meeting since taking office, and he has maintained interest rates unchanged for the fourth consecutive time three ️⃣ Warsh repeatedly emphasized the necessity of "restoring price stability" at the press conference, sending a signal that policies may not be particularly loose 4、 Market pricing vs Bank of America forecast: significant divergence Bank of America predicts three interest rate hikes in 2026 Current market pricing: Only one interest rate hike within the year (approximately 41bp) Disagreement point: The market is still relatively dovish, reflecting only the expectation of a one-time interest rate hike; Bank of America believes that economic data and policy stance support a more aggressive tightening path. The June dot matrix of the Federal Reserve also shows significant differences among officials (9 people expect at least one rate hike this year, and 6 people expect at least two). 5、 What does it mean for ordinary families and the market? A typical American household's monthly interest expenses may increase by $140-180. The borrowing costs of housing loans, car loans, credit cards, etc. will increase with the rise of interest rates. The impact on global assets (especially on Chinese investors and participants in crypto/US stocks): one ️⃣ Risk assets under pressure: higher interest rates → higher opportunity cost of capital → usually bearish for stock markets (especially high valuation technology stocks) and cryptocurrencies (risk assets such as BTC often perform under pressure in a "higher and longer" environment) two ️⃣ The strengthening of the US dollar may increase the pressure on the Chinese yuan exchange rate and expectations of capital outflows three ️⃣ Bond market: US bond yields rise, bond prices under pressure four ️⃣ Commodity differentiation: Energy may benefit, and the performance of safe haven assets such as gold depends on actual inflation and growth data Core Reminder: five ️⃣ This content is a forecast by the Bank of America (BofA) economist team and is not an official decision by the Federal Reserve. six ️⃣ The core of the viewpoint is not about 'already raising interest rates', but about' a significant shift in expectations'. seven ️⃣ The market may adjust pricing at any time due to new data such as inflation, employment, non-agricultural activities, and there is uncertainty. The sudden shift of Bank of America reflects the resilience of recent inflation and employment data, as well as the possible policy tone changes after the new chairman Warsh takes office. At present, the market is still more optimistic about the pricing of "only raising interest rates once", and the expectation difference itself may become a source of short-term volatility. For traders, it is important to focus on the following: one ️⃣ Inflation and Employment Data for July and August two ️⃣ Energy price trend three ️⃣ Warsh's public speech and market pricing changes before September interest rate negotiations